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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 11
Under the Securities Exchange Act of 1934
Riverside Group, Inc.
(Name of Issuer)
Common Stock, Par Value, $0.10 Per Share
(Title of Class of Securities)
769135 10 4
(CUSIP Number)
Catherine J. Gray
Riverside Group, Inc.
7800 Belfort Parkway, Suite 100
Jacksonville, Florida 32256
(904)281-2200, Ext. 3310
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications)
February 25, 1999
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this statement of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [ ]. (A
fee is not required only if the filing person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such
class.) (See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for purposes of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Acts (however,
see the Notes).
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CUSIP No. 769135 10 4
_____________________________________________________________________________
1) Names of Reporting Persons/S.S. or I.R.S. Identification Nos.
of Above Persons J. Steven Wilson ("JSW")
###-##-####; Wilson Financial Corporation ("WFC")
59-2006064
______________________________________________________________________________
2) Check the Appropriate Row if a Member of a Group (See
Instructions)
(a)_________________________________________________________________
(b)_________________________________________________________________
______________________________________________________________________________
3) SEC Use Only________________________________________________________
______________________________________________________________________________
4) Source of Funds (See Instructions)__________________________________
______________________________________________________________________________
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)__________________________________________________
______________________________________________________________________________
6) Citizenship or Place of Organization United States,
Florida
______________________________________________________________________________
Number of 7) Sole Voting PoweW JSW: 2,667,422;
Shares Bene- WFC: 2,543,553
ficially
Owned by 8) Shared Voting Power 0
Each Report-
ing Person 9) Sole Dispositive Power Same as #7
With
10) Shared Dispositive Power 0
- -------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting
Person Same as #7
_______________________________________________________________________________
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CUSIP No. 769135 10 4
_______________________________________________________________________________
12) Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)___________________________________________
____________________________________________________________________
_______________________________________________________________________________
13) Percent of Class Represented by Amount in Row (11)
JSW:50.5%; WFC:48.1%
______________________________________________________________________________
14) Type of Reporting Person (See Instructions)
JSW: IN; WFC: CO
______________________________________________________________________________
This Amendment No. 11 to the Statement on Schedule 13D is being
filed pursuant to Section 13(d) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
Item 6 is hereby amended by adding the following paragraph:
"On February 24, 1999, Mr. Wilson and Wilson Financial entered into
a loan agreement (the "Imagine Loan") with Imagine Investments, Inc.
("Imagine"). Pursuant to the Imagine Loan, (i) Imagine agreed on certain
terms and conditions to make a six million dollar loan to Wilson
Financial guaranteed by Mr. Wilson and secured by, among other things,
a first or second priority security interest in all shares of Riverside's
Common Stock owned by Wilson Financial and Mr. Wilson, (ii) in
consideration for the payment of $10,000 by Imagine to Mr. Wilson and
Wilson Financial, Wilson Financial granted Imagine the option to purchase
from Wilson Financial at any time on or before December 31, 2001
(extendable at Imagine's election until December 31, 2004 under certain
circumstances) up to 785,173 shares of Riverside Group's Common Stock at
a purchase price of $1.75 per share,(iii) Mr. Wilson and Wilson Financial
assigned to Imagine their registration rights with respect to the shares
of Riverside's Common Stock pledged to Imagine or subject to Imagine's
option, and (iv) Mr. Wilson and Wilson Financial granted Imagine certain
"tag-along" rights to participate in certain sales by them of shares of
rights to participate in certain sales by them of shares of Riverside
Group's Common Stock."
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"Item 7. Material to be Filed as Exhibits.
Attached as exhibits hereto are the following:
Exhibit Description
OO Loan Agreement dated February 24, 1999, among J. Steven
Wilson, Wilson Financial Corporation & Imagine
Investments, Inc. and In-Kind Note Agreement, among J.
Steven Wilson, Wilson Financial Corporation & Imagine
Investments, Inc. (Exhibit D)
PP Term Promissory Note among J. Steven Wilson, Wilson
Financial Corporation & Imagine Investments, Inc.
QQ Stock Pledge Agreement among J. Steven Wilson, Wilson
Financial Corporation & Imagine Investments, Inc.
RR Stock Option Agreement among J. Steven Wilson, Wilson
Financial Corporation & Imagine Investments, Inc.
pledging Riverside Group, Inc.' Common Stock.
SS Stock Option Agreement among J. Steven Wilson, Wilson
Financial Corporation & Imagine Investments, Inc.
pledging Wilson Financial Corporation's stock.
TT Collateral Release Letter.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
Date: March 2, 1999 ______________________________
J. Steven Wilson, Individually
Date: March 2, 1999 WILSON FINANCIAL CORPORATION
By: ___________________________
J. Steven Wilson, President
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_________________________________________________
LOAN AGREEMENT
_________________________________________________
February 25, 1999
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1. Term Loan . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Amount, Purpose and Term ....................... 1
1.2 Disbursements....................................1
1.3 No Prepayment....................................2
1.4 Maturity Date ...................................2
1.5 Fee..............................................2
2. Security for the Indebtedness . . . . . . . . . . . . .2
2.1 Stock Pledge Agreement Pertaining to Riverside...2
2.2 Stock Pledge Agreement Pertaining to Borrower....2
2.3 Guaranty.........................................2
2.4 Other Security...................................2
3. Conditions Precedent. . . . . . . . . . . . . . . . . .3
3.1 Resolutions and Approvals........................3
3.2 Legal Opinion....................................3
3.3 Loan Documents...................................3
3.4 Representations, Warranties and Covenants........3
3.5 Consents of Third Parties........................3
3.6 Corporate Matters................................3
3.7 Stock Option.....................................3
3.8 No Event of Default..............................3
4. Affirmative Covenants . . . . . . . . . . . . . . . . .4
4.1 Money Obligations................................4
4.2 Financial Statements.............................4
4.3 Financial Records................................5
4.4 Existence and Licenses...........................6
4.5 Notice...........................................6
4.6 Agreements.......................................6
4.7 Stock............................................6
4.8 Compliance with Laws and Agreements..............6
4.9 Subordination....................................7
4.10 Payment of Term Note and Other Indebtedness......7
5. Negative Covenants. . . . . . . . . . . . . . . . . . .7
5.1 Material Adverse Changes.........................7
5.2 Minimum Tangible Net Worth.......................8
5.3 Executive Compensation of Guarantor..............9
5.4 Advances, Repayment of Debts and Dividends.......9
5.5 Repurchase of Stock.............................10
5.6 Mergers, Sales and Transfers....................10
5.7 Subsidiaries....................................10
5.8 New Business....................................10
5.9 Capital Contributions...........................10
5.10 Prepayment of Other Debts.......................10
5.11 Indebtedness....................................10
5.12 Loans...........................................11
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6. Additional Agreements Regarding Stock . . . . . . . . 11
7. Events of Default . . . . . . . . . . . . . . . . . . 11
7.1 Payments.........................................12
7.2 Defaults Under Loan Documents....................12
7.3 Covenants and Agreements.........................12
7.4 Failure to Pay Other Indebtedness................12
7.5 Accuracy of Statements...........................12
7.6 Solvency and Other Matters.......................12
7.7 Other Defaults...................................13
8. Remedies Upon Default . . . . . . . . . . . . . . . . 13
8.1 Optional Acceleration............................13
8.2 Automatic Acceleration...........................14
8.3 Offsets..........................................14
8.4 Termination of Disbursements.....................14
8.5 Rights Under Security Instruments................14
8.6 Rights Cumulative................................14
9. Notices . . . . . . . . . . . . . . . . . . . . . . . 14
9.1 Giving of Notices................................14
9.2 Time Notices Deemed Given........................16
10. Guaranty of Guarantor.................................16
11. Fees and Expenses.....................................16
12. In-Kind Note..........................................17
13. Miscellaneous Provisions..............................17
13.1 Construction....................................17
13.2 Counterparts....................................17
13.3 Entire Agreement................................17
13.4 Further Assurances..............................17
13.5 Governing Law...................................17
13.6 Headings........................................18
13.7 Invalidity of Provisions; Severability..........18
13.8 Limitation on Interest..........................18
13.9 Binding Effect..................................19
13.10 Modifications...................................19
13.11 Time of Essence.................................19
13.12 Waiver..........................................19
13.13 Interpretation..................................19
13.14 Assignment......................................19
13.15 Survival of Covenants, Agreements, Warranties
and Representations.............................19
13.16 Bank Boston's Interest in Stock.................20
14. Jury Trial Waiver.....................................20
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LOAN AGREEMENT
This Loan Agreement is entered into and effective as of the 25th day of
February, 1999, by and among: (i) Imagine Investments, Inc., a Delaware
corporation with principal place of business in Dallas, Texas (the
"Lender"), (ii) Wilson Financial Corporation, a Florida corporation with
principal place of business in Jacksonville, Florida (the "Borrower"), and
(iii) J. Steven Wilson, an individual of Jacksonville, Florida (the
"Guarantor").
Recitals:
A. Borrower desires to obtain from Lender a term loan in the amount
of Six Million Dollars ($6,000,000.00), which will be used by Borrower
to pay various obligations as and when the same are due and payable
("Term Loan").
B. In order to induce Lender to enter into this Loan Agreement and
to extend the Term Loan hereunder, without which inducement Lender would
be unwilling to take such actions, and in consideration of the benefits
he will receive therefrom, Guarantor is willing and desires to guaranty
the obligations of Borrower under this Loan Agreement and to make the
agreements as set forth herein.
Agreement:
Now, Therefore, the parties hereby agree as follows:
1. Term Loan. Subject to the terms and conditions contained herein,
Lender hereby agrees to make the Term Loan to Borrower, in accordance
with the following provisions:
1.1 Amount, Purpose and Term. The amount of the Term Loan shall
be Six Million Dollars ($6,000,000.00). The Term Loan is evidenced by
and shall be payable and otherwise be made on the terms set forth in the
"Term Note" made by Borrower to Lender of even date herewith and on the
terms established in this Loan Agreement. All payments on the Term Note
shall be made in immediately available funds at the principal office of
Lender on each date as specified in the Term Note and/or this Loan
Agreement. The Term Note shall bear interest at the rate of ten percent
(10%) per annum. The proceeds of the Term Loan shall be used by Borrower
to pay principal and interest payments on Borrower's obligations to Bank
Boston, N.A. (the "Bank Boston") and Compass Bank as set forth on Exhibit
A attached hereto and made a part hereof and to pay the other outstanding
obligations as set forth on Exhibit B attached hereto and made a part
hereof.
1.2 Disbursements. Contemporaneously with the execution of this
Loan Agreement and the fulfillment of all conditions precedent to the
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disbursement of the proceeds of the Term Loan, Lender has disbursed funds
by wire transfer to Borrower or for Borrower's benefit in the amounts
shown on Exhibit C attached hereto and made a part hereof and, as hereby
instructed by Borrower, has paid Borrower's obligations to Lender and to
Robert T. Shaw as listed on Exhibit B hereto and has paid Lender's legal
fees in connection with the Term Loan.
Lender shall make additional disbursements of principal on the Term
Loan to Borrower as hereinafter requested by Borrower upon ten (10)
business days prior written notice from time to time to Lender in
accordance with the schedules respectively set forth on Exhibit A and
Exhibit B hereto. The Term Loan is not a revolving loan, and amounts
disbursed thereunder may not be paid down and subsequently reborrowed by
Borrower.
1.3 No Prepayment. No portion of the principal balance of the
Term Note, nor any accrued interest thereon, may be prepaid at any time,
in whole or in part, without the written consent of Lender.
1.4 Maturity Date. The maturity date of the Term Note, at which
time all outstanding principal and accrued interest on the Term Note
shall be due and payable in full, is December 31, 2001.
1.5 Fee. Borrower agrees to pay a fee to Lender in the amount of
$10,000 for agreeing to make the Term Loan and hereby instructs Lender
to immediately pay such fee out of the proceeds of the Term Loan.
2. Security for the Indebtedness. The Term Note, and any and all other
obligations and liabilities owed by Borrower or Guarantor to Lender
(collectively, the "Indebtedness"), is and shall be secured by and
entitled to the benefits of all the following (all of the following are
sometimes hereinafter collectively referred to as the "Security
Instruments"; the Security Instruments and this Loan Agreement are
sometimes hereinafter collectively referred to as the "Loan Documents"):
2.1 Stock Pledge Agreement Pertaining to Riverside. That certain
Stock Pledge Agreement between Borrower, Guarantor and Lender of even
date herewith pursuant to which 2,617,243 shares of stock (the "Stock")
of Riverside Group, Inc., a Florida corporation (the "Corporation") have
been pledged by Borrower and Guarantor to Lender, together with the
appropriate blank stock powers and the delivery of the original stock
certificates for 392,282 shares of such Stock to Lender (the remainder
of such Shares are being held by Bank Boston as agent for Lender to
perfect Lender's security interest therein).
2.2 Stock Pledge Agreement Pertaining to Borrower. That certain
Stock Pledge Agreement between Guarantor and Lender of even date
herewith, pursuant to which certain of the outstanding shares of stock
of Borrower have been pledged by Guarantor to Lender, together with
appropriate blank stock powers and the delivery of the original stock
certificates to Lender.
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2.3 Guaranty. The unconditional personal guaranty agreement of
Guarantor pursuant to Section 10 hereunder, and pursuant to the Guaranty
Agreement attached to the Term Note.
2.4 Other Security. Other security and instruments, if any,
granted by Borrower and/or Guarantor to Lender, whether of even date
herewith or hereafter or heretofore granted, to secure the Term Note
and/or any other Indebtedness.
3. Conditions Precedent. Lender's obligations under this Loan
Agreement, including each disbursement of any proceeds of the Term Loan,
shall be subject to the fulfillment to Lender's satisfaction of each of
the following conditions precedent, unless such condition or conditions
shall be waived by Lender in writing, in the sole discretion of Lender:
3.1 Resolutions and Approvals. Borrower shall furnish certified
copies of all consents, resolutions and approvals as may be required by
Lender, evidencing approval of the execution of the Loan Documents, all
in form and substance acceptable to Lender.
3.2 Legal Opinion. Lender shall have received a favorable written
opinion of counsel for Borrower and Guarantor (i.e. Holland & Knight),
dated and effective as of the date on which the Loan Documents are
executed and delivered, addressed to Lender and satisfactory in form and
substance to Lender, with only such modifications, exceptions,
assumptions and qualifications as shall be acceptable to Lender and its
counsel.
3.3 Loan Documents. All the Loan Documents, and such other
documents or instruments as Lender may reasonably require, all in form
and substance acceptable to Lender, shall have been duly executed and
delivered to Lender, and, where appropriate, duly recorded in the proper
public offices.
3.4 Representations, Warranties and Covenants. All
representations and warranties of Borrower and Guarantor contained herein
shall be true and correct, and Borrower and Guarantor shall be in
compliance with all covenants contained in this Loan Agreement and in the
Security Instruments.
3.5 Consents of Third Parties. Such third party consents,
estoppels or agreements as Lender may require, including, but not
limited to, the consent and agreement of Bank Boston to the Stock Pledge
Agreement described in Section 2.1 hereof, all of which shall be in form
and content satisfactory to Lender in its sole discretion.
3.6 Corporate Matters. Lender shall have been provided with true
and correct copies of all articles of incorporation, by-laws and
corporate minutes of Borrower and shall have been provided such further
information as shall have been requested by Lender with regard to the
business, properties and finances and operations of Borrower and
Guarantor.
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3.7 Stock Option. Borrower and Guarantor shall have executed and
delivered a Stock Option Agreement in favor of Lender, of even date
herewith (the "Option Agreement"), pursuant to which Borrower and
Guarantor shall have granted Lender the exclusive right and option to
purchase 785,173 shares of the common stock of the Corporation for a
purchase price of $1.75 per share, for a term through December 31, 2001
(subject to extension as therein provided) (the "Option").
3.8 No Event of Default. No "Event of Default" and no event which
would constitute an Event of Default with the giving of notice, passage
of time, or both (a "Possible Default") shall have occurred.
4. Affirmative Covenants. Borrower and Guarantor jointly and severally
agree that until the principal of and all interest on the Term Note and
all the other Indebtedness shall have been paid in full and this Loan
Agreement terminated, Borrower and Guarantor, as applicable, shall
perform and observe all of the following terms and provisions:
4.1 Money Obligations. Each of Borrower and Guarantor shall pay
in full:
(a) Prior in each case to the date when penalties would
attach, all taxes, assessments and governmental charges and levies
hereafter due by Borrower and/or Guarantor (except only those so long as
and to the extent that the same shall be contested in good faith by
appropriate and timely legal proceedings and for which a bond staying
execution or enforcement thereof shall have been posted to the
satisfaction of the Lender); and
(b) All its and his respective debts, obligations and
liabilities incurred after the date hereof, on or prior to their
respective due dates, for which it or he may be or become liable or to
which any or all of its or his properties may be or become subject.
4.2 Financial Statements.
(a) Borrower shall furnish to Lender, within thirty (30) days
after the end of each calendar quarter, an income statement of Borrower
for that quarter and for the period from the beginning of the applicable
fiscal year of the Borrower to the end of such quarter and a balance
sheet of Borrower as of the end of each such quarter, certified by the
President or Chief Financial Officer of Borrower to be true, correct and
accurate.
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(b) Borrower shall furnish to the Lender, within ninety (90)
days after the end of each fiscal year of Borrower, (i) a complete
financial report, consisting of balance sheet, statement of profit and
loss, application of funds, change in financial position and the like,
prepared or reviewed by a firm of independent public accountants of
recognized standing acceptable to Lender, and (ii) the annual audit
report of the Corporation, together with the opinion of the accounting
firm that prepared such audit report, that said report presents fairly
the financial position of the Corporation as of the date of the audit and
the results of the Corporation's operations and its cash flows for the
year, without qualification.
(c) Borrower shall furnish to Lender, immediately upon
Lender's written request, such other information about the financial
condition, properties and operations of Borrower and the Corporation as
Lender may from time to time reasonably request.
(d) Guarantor shall furnish to Lender, (i) on or before
January 31 of each year, financial statements of Guarantor, in a form
approved by Lender, as of the preceding December 31, certified as true
and correct by Guarantor, (ii) a copy of Guarantor's signed federal tax
return within five (5) business days of the filing of such return with
the Internal Revenue Service, and (iii) promptly on demand of Lender,
such other financial information concerning Guarantor as Lender may
request from time to time;
(e) All financial statements specified in Section 4.2(a),
(b), and (c) above shall be furnished to Lender with comparative figures
for the corresponding period in the preceding fiscal year; and all
financial statements referred to in Section 4.2(a), (b), and (c) above
shall be prepared on the accrual basis of accounting, in accordance with
GAAP applied on a basis consistent with prior years of Borrower and the
Corporation, on a consolidated (and consolidating) basis and shall be
accompanied by a certificate of the President of Borrower:
(1) stating that there exists no Event of Default or
Possible Default hereunder; or
(2) describing with particularity any Event of Default or
Possible Default, stating the nature thereof, the period of existence
thereof and what action Borrower, its subsidiaries and/or Guarantor
have taken or propose to take with respect thereto.
(f) Borrower shall furnish to Lender, prompt written notice
of any condition or event which has resulted in or might result in:
(1) a material adverse change in the consolidated condition
(financial or otherwise) or operations of Borrower, the Corporation
or Guarantor; or
<page 13>
(2) a breach of or noncompliance with any term, condition
or covenant contained herein or in any document delivered pursuant
hereto; or
(3) a material breach of, or noncompliance with, any term,
condition or covenant of any material contract to which Borrower
and/or any of its subsidiaries or the Corporation and/or any of its
subsidiaries or the Guarantor are a party or by which they or their
property may be bound.
(g) Borrower and Guarantor shall furnish to Lender prompt
written notice of any claims, proceedings or disputes (whether or not
purportedly on behalf of Borrower or Guarantor) against, or to the
knowledge of Borrower or Guarantor, threatened or affecting Borrower or
Guarantor which, if adversely determined, would have a material adverse
effect on the business, properties or condition (financial or otherwise)
of Borrower or any subsidiaries or Guarantor or any labor controversy
resulting in or threatening to result in a strike against Borrower or
Guarantor, or of any proposal by any public authority to acquire any of
the material assets or business of Borrower.
4.3 Financial Records. Borrower and Guarantor, as applicable,
shall:
(a) At all times keep true and complete financial records in
accordance with GAAP consistently applied (as to Guarantor, on the cash
method);
(b) At all reasonable times, permit Lender to examine any or
all of its or his financial and other records and to make excerpts
therefrom and transcripts thereof;
(c) Maintain its books and records at its and his current
principal office at 7800 Belfort Parkway, Suite 100, Jacksonville,
Florida 32256; and
(d) Maintain its and his current fiscal year.
4.4 Existence and Licenses. Borrower shall preserve its corporate
existence in good standing and will be and remain qualified to do
business in good standing in all states in which it is required to be so
qualified, and will maintain all permits, licenses and other similar
matters necessary or appropriate for its business.
4.5 Notice. Guarantor and Borrower (acting by and through the
President or another duly authorized officer of the Borrower) shall
notify Lender in writing, within no more than twenty-four (24) hours (and
without the benefit of any grace period afforded in any provision of this
Loan Agreement or any Security Instrument) after Guarantor or Borrower
or any of Borrower's officers or directors learns of any of the
following:
<page 14>
(a) the existence or occurrence of any Event of Default or
Possible Default under this Loan Agreement, or any default under the Term
Note or any of the Security Instruments; or
(b) any representation or warranty made herein, or in any
related writing, not being or ceasing to be, for any reason, in any
material respect, true and complete and not misleading; or
(c) the institution of, or adverse determination in, any
litigation, arbitration or governmental proceeding (including but not
limited to an audit or examination by the Internal Revenue Service) which
could have a material and adverse effect upon Borrower, the Corporation
or Guarantor, which notification shall describe the nature thereof, what
happened with respect thereto and what steps are being taken by Borrower,
the Corporation or Guarantor, as the case may be, with respect thereto.
4.6 Agreements. Borrower and Guarantor shall and shall cause the
Corporation to comply timely with all their respective agreements and
valid obligations to and with all parties, and shall not commit or permit
to be committed any default thereunder.
4.7 Stock. Borrower shall instruct its Secretary and stock
transfer agent not to issue any additional capital stock, warrants,
options or rights with respect thereto or instruments convertible into
Borrower's capital stock, and Borrower shall not issue any additional
capital stock, warrants, options or rights with respect thereto, or
instruments convertible into Borrower's capital stock, unless the same
is directly pledged and delivered to Lender as security for the Term Note
pursuant to the Stock Pledge Agreement referred to in Section 2.2 hereof.
4.8 Compliance with Laws and Agreements. Each of Borrower and
Guarantor shall, and shall cause the Corporation at all times to, comply
with the applicable statutes, regulations, ordinances and other laws
applicable to its and his operations and activities.
4.9 Subordination. Borrower and Guarantor hereby agree that all
current and future debts of Borrower and/or any of its subsidiaries to
Guarantor or any other stockholder or director of Borrower or any of
their spouses, in laws, or blood relatives shall, and are hereby declared
to be, fully subordinated to the prior repayment of all the Indebtedness,
including the Term Note, and, no payments of principal or interest on
such other debts shall be made, without the prior written consent of
Lender, until the Indebtedness, including the Term Note, has been paid
in full.
<page 15>
4.10 Payment of Term Note and Other Indebtedness. Borrower shall
timely pay the Term Note and all the other Indebtedness in accordance
with their respective terms. All payments on the Term Note and the other
Indebtedness shall be made to Lender in immediately available funds at
Lender's principal office on the date due by no later than 2:00 p.m.
Lender's local time. Funds received by Lender after that time shall be
deemed to be received by Lender on the following business day.
5. Negative Covenants. Borrower and Guarantor jointly and severally
agree that, until the principal of and all interest on the Term Note and
all the other Indebtedness shall have been paid in full and this Loan
Agreement terminated, Borrower and Guarantor, as applicable, shall
observe and comply with each of the following provisions:
5.1 Material Adverse Changes. Borrower shall not permit a
"material adverse change" (as hereinafter defined) to occur. A "material
adverse change" shall be deemed to have occurred upon any of the
following:
(a) The operating income of Wickes, Inc. for each fiscal four
quarter period in fiscal year 1999 and each fiscal year thereafter is
less than 89% of the amount thereof for the corresponding period in
fiscal year 1998. This calculation will be made on a cumulative basis
(operating income in 1998 was approximately $30,000,000, and operating
income is expected to range between $38,000,000 and $42,000,000 in 1999).
(b) Any real estate of the Corporation is sold for less than
90% of the amount shown on the Corporation's Collateral Analysis
Schedule, a copy of which will be provided to Lender within 30 days of
the loan closing and updated quarterly (the "Collateral Analysis
Schedule"); or in the event there are no sales, future values (as
reflected on any future Collateral Analysis Schedule or, if lower,
appraisals secured as provided in Section 5.2 (b) below) of such real
estate diminish more than 15% in the aggregate from their present value
reflected on the initial Collateral Analysis Schedule.
(c) The operating revenues and cash flows from Cybermax,
Inc., an affiliate of the Corporation, at the end of any fiscal quarter
in 1999 (on a cumulative basis) is less than 90% of those recorded for
the same period in 1998 or if the negative cash flow from Cybermax, Inc.
is more than $1,000,000 at any time during 1999.
(d) During fiscal year 2000 and 2001 of Cybermax, Inc.,
following approval of the Executive Committee (consisting of Harry
Carneal, Robert Shaw and Guarantor) of Cybermax, Inc.'s business plan,
if on a cumulative basis, the gross profits of Cybermax, Inc. are less
than 75% of amounts projected in such business plan, or expenses are more
than 10% above amounts projected in such business plan.
<page 16>
(e) The Corporation's investment in Greenleaf, Inc. results
in a material negative cash effect on the Corporation. Examples of a
negative effect associated with this investment would be if the
Corporation incurs any substantial negative cash flow or is involved in
material litigation in connection with Greenleaf, Inc.
(f) Following approval of the Executive Committee (consisting
of Harry Carneal, Robert Shaw and Guarantor) of BuildScape, Inc.'s
business plan, and provided significant outside capital is not invested
in BuildScape, Inc., if on a cumulative basis, the gross profits of
BuildScape, Inc. are less than 75% of amounts projected in such business
plan, expenses are more than 10% above amounts projected in such business
plan, or the stages of completion of the basic infrastructure of
BuildScape, Inc. are more than six (6) weeks delinquent. If significant
outside capital is invested in BuildScape, Inc., the foregoing business
plan shall be modified to reflect such investment and submitted to the
Executive Committee (and whose members must be as stated above), for
approval and if such modified business plan is not approved by the
Executive Committee within 20 days after such capital infusion, that
shall be deemed a material adverse change; if such modified business plan
is approved by such Executive Committee; and if gross profits and
expenses of BuildScape, Inc. are within 25% of those projected in such
modified business plan that has been approved by such Executive
Committee, no material adverse change will be deemed to have occurred
under this clause, but otherwise a material adverse change under this
clause will be deemed to have occurred.
Each of the foregoing items will be considered not individually but
rather in the aggregate, such that if an individual item has occurred but
there is a positive offset with respect to another item, Lender will
consider the net effect when making its determination as to whether a
"material adverse change" has occurred, but the Lender shall be entitled
to make such determination in its sole and unfettered discretion. As an
example, in the event the Corporation's investment in Greenleaf, Inc.
ultimately results in the realization of clear value (i.e. cash), then
this will be taken into consideration in evaluating the progress or
results of any of the other items.
5.2 Minimum Tangible Net Worth. Borrower and Guarantor shall not
permit either Borrower or the Corporation to fail to meet the following
tests:
(a) Borrower shall maintain a minimum GAAP net worth of
$250,000, and at no time will the calculated net realizable value of
Borrower's assets be less than $2,000,000 in excess of Borrower's
liabilities. The calculated net realizable value will be computed at the
end of each calendar quarter. The calculated net realizable value of
Borrower's assets will be based upon the agreed upon calculations for
Borrower's interest in the Corporation plus the net current assets and
<page 17>
less all liabilities of the Borrower calculated on a GAAP basis. If
within 15 days following the end of any calendar quarter, Borrower and
Lender cannot agree as to the value of Borrower's interest in the
Corporation, then Borrower and Lender shall promptly and, in all events,
within 15 days select an appraiser to establish that value. If they have
not agreed on an appraiser within the 15 days, then Lender, acting alone,
may select as the appraiser any nationally recognized public certified
accounting firm, except for any firms then employed by the Lender.
(b) The Corporation shall maintain a minimum GAAP net worth
of $1,000,000, and at no time will the calculated net realizable value
of the assets of the Corporation be less than $10,000,000 in excess of
the Corporation's liabilities. The calculated net realizable value of
the assets will be computed at the end of each calendar quarter. The
calculated net realizable value of the assets will be based upon the
market price of the Wickes, Inc. shares owned by the Corporation (which
shall be the average closing price of the Wickes, Inc. stock over the
last 20 trading days of the calendar quarter), the net realizable value
of any real estate (determined as set forth below), the estimated value
of BuildScape (as determined by Lender in its sole discretion), plus the
net current assets and less all liabilities (adjusted for any amounts
included in the calculations above) of the Corporation. For purposes of
this Section 5.2, the net realizable value of the real estate shall be
as reflected on the Collateral Analysis Schedule prepared by the
Corporation's Real Estate Manager using comparable sales figures and
updated for past sales. The Lender reserves the right, at its sole
discretion, to request a third party appraisal no more than once in a
twelve month period. If the Lender exercises this right, then the
minimum net realizable value of any given piece of real estate for the
twelve months following receipt of the appraisal shall not be greater
than the amount shown on the appraisal.
As used herein, the term GAAP refers to generally accepted accounting
principals in effect in the United States of America from time to time
and applied in a manner consistent with past practices.
5.3 Executive Compensation of Guarantor. Unless approved by
Riverside's Compensation Committee, one of whose members must be Harry
Carneal or Robert T. Shaw, the aggregate amount of compensation and fees
(including bonuses) payable to Guarantor by Borrower, the Corporation,
and their subsidiaries and affiliates (other than Wickes, Inc.) shall not
be increased by more than 5% per annum over the annual rate in effect
during fiscal year 1998.
5.4 Advances, Repayment of Debts and Dividends. Without the prior
written consent of Lender, Borrower shall not make any advances or make
any payment of principal or interest on any debt owed to Guarantor, and
shall not pay any actual or constructive dividends in cash, stock or
other property, and shall not make any other distributions whatsoever
with respect to any of its capital stock, or set aside any funds for any
of such purposes.
<page 18>
5.5 Repurchase of Stock. Without the prior written consent of
Lender, neither Borrower nor any of its subsidiaries nor Guarantor shall
purchase, acquire, redeem or retire any of Borrower's capital stock or
rights with respect thereto, nor shall Borrower liquidate or dissolve or
take any action with a view towards same.
5.6 Mergers, Sales and Transfers. Without the prior written
consent of Lender, neither the Borrower nor any of its subsidiaries (for
the purposes of Sections 5.6, 5.7, 5.9, 5.11 and 5.12, Wickes, Inc. shall
not be deemed a subsidiary of the Corporation or the Borrower) (whether
in one transaction or in a series of transactions) shall:
(a) Be or become a party to any consolidation, reorganization
or merger;
(b) Sell all or substantially all of its assets;
(c) Purchase all or a substantial part of the assets of any
other corporation, partnership, limited liability company or other busi-
ness enterprise; or
(d) Effect any change in its capital structure, or amend its
Articles of Incorporation.
5.7 Subsidiaries. Without the prior written consent of Lender,
neither Borrower nor any of its subsidiaries shall create any new
subsidiaries or acquire any capital stock or other securities or
interests in another corporation, limited liability company, entity,
partnership, joint venture or business. Borrower shall not transfer,
assign or lend any money or other property to any subsidiary or
affiliate.
5.8 New Business. Borrower shall not change materially the nature
of its business in any manner.
5.9 Capital Contributions. Without the prior written consent of
Lender, neither Borrower nor any of its subsidiaries shall make any
capital contribution to, or investment in, any subsidiary or purchase or
commit to purchase any additional stock or securities of any kind from
any subsidiary.
5.10 Prepayment of Other Debts. Neither Borrower nor the Guarantor
shall not prepay prior to their respective presently existing maturities
any debts or liabilities.
5.11 Indebtedness. Without the prior written consent of Lender,
neither Borrower nor any of its subsidiaries nor Guarantor shall incur
any indebtedness for borrowed money whatsoever or guaranty or become
<page 19>
directly or contingently liable on any note or other evidence of
indebtedness, letter of credit or contract of any kind, or enter any
contract or agreement requiring it or him to make payments regardless of
the performance by the other party or that has the effect of constituting
a guaranty (and Borrower and Guarantor shall not make any guaranty for
any affiliate), except only for trade payables incurred by Borrower in
the ordinary course of business, and capital leases and equipment
purchases of $100,000 or less in the aggregate per annum.
5.12 Loans. Neither Borrower nor any of its subsidiaries nor
Guarantor shall make any loans other than the creation of accounts
receivable in the ordinary course of business, or advance any funds
whatsoever, without the prior written consent of Lender.
6. Additional Agreements Regarding Stock. As additional security for
the Term Loan, and also in connection with the Option, Borrower and Guarantor
hereby assign to Lender all of the respective rights, titles and
interests of Borrower and Guarantor under any and all registration rights
and similar agreements with respect to the stock of the Corporation, to
the extent Lender has from time to time foreclosed upon or otherwise
acquired or thereafter does foreclose or otherwise acquire any of the
stock of the Corporation, including any stock purchased pursuant to the
exercise of the Option, as defined in Section 3.7 hereof, or as to which
Lender has exercised such Option.
In addition, in the event Lender has from time to time foreclosed upon
or otherwise purchased or acquired any of the stock of the Corporation
(or of Borrower) pursuant to the Option or otherwise, and if Borrower
and/or Guarantor shall, at any time and from time to time through
December 31, 2009, agree to sell any of the stock of the Corporation (or
of Borrower) owned by either of them, or to otherwise transfer any of
such stock, either directly or indirectly, Borrower and Guarantor, and
or either or both of them that are selling or transferring such stock,
shall:
(i) Give written notice to Lender by certified or
registered mail (return receipt requested) or by hand delivery (with
a return receipt) as promptly as practicable (but in no event less
than fifteen (15) days prior to such sale or transfer) of all the
details, price and terms of such sale or transfer and the identity of
the party (the "Buyer") to whom such stock is to be sold or
transferred; and
(ii) Require as a condition of such sale or transfer
that the Buyer include in such sale or transfer the number of shares
of the stock owned by Lender that have been acquired by Lender through
foreclosure or in lieu of foreclosure that is specified by Lender in
a written notice to be given by Lender to Borrower or Guarantor, as
applicable, within ten (10) days after Lender's receipt of the notice
provided for in subparagraph (i) above, all on the same terms and
conditions and at the same price per share as Borrower and/or
Guarantor are selling such stock; and
<page 20>
(iii) Lender shall bear its own legal expenses in
connection with participating in such sale or transfer, but Borrower
and Guarantor shall pay all other expenses of Lender in connection
with such sale or transfer.
All of the foregoing provisions of this Section 6 shall survive
payment in full of the Term Loan and termination of this Loan Agreement,
and Lender (and its assigns) shall be entitled to the benefits of this
Section 6 both under this Loan Agreement and in connection with the
Option and any Stock acquired by Lender pursuant to the Option.
7. Events of Default. The occurrence of any or all of the following
events constitute an "Event of Default" under this Loan Agreement:
7.1 Payments. If any installment of principal or interest on any
of the Indebtedness, including, but not limited to the Term Note, shall
not be paid in full punctually when due and payable, except if it is
"impractical" for Borrower and Guarantor to pay such interest as such term
is used in the Term Note.
7.2 Defaults Under Loan Documents. If any default or Event of
Default occurs under any Loan Document.
7.3 Covenants and Agreements. If Borrower or Guarantor shall
violate or fail to perform or observe any covenant, agreement, condition,
representation, warranty, or other provision (other than as governed by
Section 7.1 or 7.2 hereof) contained or referred to in any of the Loan
Documents (or the Option Agreement) and such failure or omission shall
not have been fully corrected to the complete satisfaction of Lender
within 15 days (or such shorter grace period as may be provided in the
particular Loan Document (or the Option Agreement) for the particular
default) after Lender has given written notice thereof to Borrower and
Guarantor.
7.4 Failure to Pay Other Indebtedness. If Borrower or any of its
subsidiaries shall fail to pay or perform any other obligation it may
have or be subject to with respect to any party within any applicable
grace period.
7.5 Accuracy of Statements. If any representation or warranty or
other statement of fact contained herein or in any of the Security
Instruments or in any writing, certificate, report or statement at any
time furnished by or for Borrower and/or Guarantor to Lender pursuant to
or in connection with this Loan Agreement or otherwise in connection with
the transactions contemplated hereby shall be false or misleading in any
material respect or shall omit to state a material fact required to be
stated therein in order to make the statements contained therein, in
light of the circumstances under which made, not misleading, on the date
as of which made, whether or not made with knowledge of same.
<page 21>
7.6 Solvency and Other Matters. If Borrower or any of its
subsidiaries or Guarantor shall:
(a) discontinue business; or
(b) make a general assignment for the benefit of creditors; or
(c) apply for or consent to the appointment of a custodian,
receiver, trustee or liquidator of all or a substantial part of its, his
or their assets; or
(d) be adjudicated a bankrupt or insolvent; or
(e) file a voluntary petition in bankruptcy or file a
petition or an answer seeking a composition, reorganization or an
arrangement with creditors or seeking to take advantage of any other law
(whether federal or state) relating to relief for debtors, or admit (by
answer, default or otherwise) the material allegations of any petition
filed against them in any bankruptcy, reorganization, composition,
insolvency or other proceeding (whether federal or state) relating to
relief for debtors; or
(f) suffer or permit to continue unstayed and in effect for
thirty (30) consecutive days any judgment, decree or order entered by a
court or governmental agency of competent jurisdiction, which assumes
control of Borrower (or Guarantor) or approves a petition seeking a
reorganization, composition or arrangement of Borrower (or Guarantor) or
any other judicial modification of the rights of any of its (or
Guarantor's) respective creditors, or appoints a custodian, receiver,
trustee or liquidator for Borrower or Guarantor or for all or a
substantial part of any of their business or assets; or
(g) not be paying its or his debts as they become due; or
(h) be enjoined or restrained from conducting all or a
material part of any of its or his businesses as now conducted and the
same is not dismissed and dissolved within thirty (30) days after the
entry thereof.
7.7 Other Defaults. If any of the following shall occur:
(a) Any lien, garnishment, levy, attachment or encumbrance of
any kind is placed against any property which serves as collateral for
the Term Note;
<page 22>
(b) The issuance of any tax lien or levy against Borrower or
Guarantor or any of its or his property or Borrower's or Guarantor's
failure to pay, withhold, collect or remit any tax when assessed or due;
(c) There shall hereafter occur any material and adverse
change in the business operations and condition, financial or otherwise,
of Borrower or Guarantor or in the value of the collateral securing
payment of the Term Note; and
(d) If a final judgment or judgments for the payment of money
in the aggregate in excess of $10,000.00 shall be rendered against
Borrower or Guarantor and such judgment(s) shall remain unsatisfied or
unstayed for a period of thirty (30) days.
8. Remedies Upon Default. Notwithstanding any contrary provision or
inference herein or elsewhere Lender shall have the following rights and
remedies:
8.1 Optional Acceleration. If any Event of Default referred to in
Sections 7.1 through 7.5 hereof shall occur, Lender, in its absolute
discretion, without further notice to the Borrower or Guarantor, may
declare all or any of the Indebtedness, including, but not limited to,
the Term Note, to be, whereupon the same shall be, accelerated and
immediately due and payable in full, all without any presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived
by Borrower and Guarantor.
8.2 Automatic Acceleration. If any Event of Default referred to
in Section 7.6 hereof shall occur, all of the Indebtedness, including the
Term Note, shall thereupon become accelerated and immediately due and
payable in full, all without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by Borrower and
Guarantor.
8.3 Offsets. If any Event of Default or Possible Default shall
occur or begin to exist, Lender shall have the right then, or at any
time thereafter, to set off against, and to appropriate and apply toward
the payment of the Indebtedness (in such order as Lender may select in
its sole discretion), including but not limited to the indebtedness
evidenced by the Term Note, whether or not such indebtedness shall then
have matured or be due and payable and whether or not Lender has declared
the Term Note and/or other Indebtedness to be in default and immediately
due, any and all deposit balances and other sums and indebtedness and
other property then held or owed by the Lender to or for the credit or
account of Borrower and/or Guarantor, and in and on all of which Borrower
and Guarantor hereby grant Lender a first security interest and lien to
secure all the Indebtedness, all without notice to or demand upon
Borrower or Guarantor all such notices and demands being hereby expressly
waived.
<page 23>
8.4 Termination of Disbursements. Upon the occurrence of any
Possible Default, Lender may immediately cease making disbursements under
this Loan Agreement, while any Possible Default exists. Upon the
occurrence of any Event of Default, Lender shall thereafter have no
obligation under any circumstances to make any further disbursements
under this Loan Agreement, even if the Event of Default is subsequently
cured, and, in such event, Lender may pursue all other remedies available
to Lender hereunder or in connection herewith.
8.5 Rights Under Security Instruments. If any Event of Default
shall occur, Lender shall also have all rights and remedies granted it
under any and all of the Security Instruments or other Loan Documents
securing or intended to secure the Indebtedness.
8.6 Rights Cumulative. All of the rights and remedies of Lender
upon occurrence of an Event of Default or Possible Default hereunder
shall be cumulative to the greatest extent permitted by law and shall be
in addition to all those rights and remedies afforded Lender at law or
equity.
9. Notices.
9.1 Giving of Notices. All notices, requests, consents,
approvals, waivers, demands and other communications hereunder
(collectively, "Notices") shall be deemed to have been given if in writing
and (1) personally delivered against a written receipt, or (2) sent by
confirmed telephonic facsimile, or (3) delivered to a reputable express
messenger service (such as Federal Express, DHL Courier and United Parcel
Service) for overnight delivery, addressed as follows (or to such other
address as a party shall have given Notice to the other):
If to Lender:
Imagine Investments, Inc.
8150 North Central Expressway
Suite 1901
Dallas, Texas 75206
Attn: Gary Goltz, General Counsel
Telephone: (214) 365-1905
Fax: (214) 365-6905
cc: Michael M. Fleishman, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, Kentucky 40202
Telephone: (502) 587-3530
Fax: (502) 540-2131
<page 24>
If to Borrower:
Wilson Financial Corporation
7800 Belfort Parkway, Suite 100
Jacksonville, FL 32256
Attn: J. Steven Wilson
Telephone: (904) 281-2200
Fax: (904) 296-0584
cc: Malcolm Graham, Esq.
Holland & Knight
One Independent Drive, Suite 2000
Post Office Box 1559
Jacksonville, Florida 32201-1559 (32202 street address)
Telephone: (904) 354-4141
Fax: (904) 358-2199
If to Guarantor:
J. Steven Wilson
7800 Belfort Parkway, Suite 100
Jacksonville, Florida 32256
Telephone: (904) 281-2200
Fax: (904) 296-0584
cc: Malcolm Graham, Esq.
Holland & Knight
One Independent Drive, Suite 2000
Post Office Box 1559
Jacksonville, Florida 32201-1559 (32202 street address)
Telephone: (904) 354-4141
Fax: (904) 358-2199
9.2 Time Notices Deemed Given. All Notices shall be effective
upon being properly personally delivered, or upon confirmation of a
telephonic facsimile, or upon the delivery to a reputable express
messenger service. The period in which a response to any such notice
must be given shall commence to run from the date on the receipt of a
personally delivered notice, or the date of confirmation of a telephonic
facsimile or two days following the proper delivery of the Notice to a
reputable express messenger service, as the case may be.
10. Guaranty of Guarantor. Guarantor unconditionally guarantees
each and every covenant, agreement, warranty, representation and obligation of
Borrower under this Loan Agreement and consents to all the terms hereof
and thereof, and hereby waives all suretyship and guarantors' defenses
generally. All obligations of Borrower and Guarantor under this Loan
Agreement shall be joint and several.
<page 25>
11. Fees and Expenses. Borrower and Guarantor agree that they
shall beresponsible for and shall pay Lender's expenses incurred in negotiating
and effecting the Term Loan and the Loan Documents, including Lender's
attorneys' fees which, at Lender's option, may be deducted from the
proceeds of the Term Loan and paid to Lender's counsel, but shall
nevertheless be deemed disbursed directly to Borrower. and evidenced by
the Term Note.
Further, in the event of any default under this Loan Agreement, the
Term Note or any of the Security Instruments or any related instruments,
Borrower and Guarantor will pay to Lender, to the extent allowable by
applicable law, such further amounts as shall be sufficient to reimburse
fully the Lender for all of its costs and expenses of enforcing its
rights and remedies under this Loan Agreement, the Term Note and the
Security Instruments, and in protecting or preserving any security for
the Indebtedness including without limitation, Lender's reasonable
attorneys', appraisers' and accountants' fees, court costs, security
costs and maintenance costs, and the same shall be deemed evidenced by
the Term Note and secured by all the Security Instruments. All
obligations provided for in this Section shall survive termination or
cancellation of this Loan Agreement for any reason whatsoever.
12. In-Kind Note. Pursuant to Section 3 of the Term Note, Borrower
may elect to pay the first year's interest by the execution of an in-kind
note in the form shown on Exhibit D attached hereto and made a part
hereof (the "In-Kind Note"). The In-Kind Note, if executed, shall
constitute Indebtedness as that term is defined in this Loan Agreement
and shall be secured by and entitled to the benefits of all of the
Security Instruments.
13. Miscellaneous Provisions. This Loan Agreement shall be subject
to the following miscellaneous provisions:
13.1 Construction. The parties have participated jointly in the
negotiation and drafting of this Loan Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Loan
Agreement shall be construed as if drafted jointly by the parties and no
presumption of burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any of the provisions of this Loan
Agreement. Unless the context clearly states otherwise, the use of the
singular or plural in this Loan Agreement shall include the other and the
use of any gender shall include all others. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Loan
Agreement. Unless otherwise expressly provided, the word "including" does
not limit the preceding words or terms.
<page 26>
13.2 Counterparts. This Loan Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original copy
of this Loan Agreement and all of which, when taken together, shall be
deemed to constitute one and the same agreement.
13.3 Entire Agreement. This Loan Agreement embodies the entire
agreement and understanding of the parties hereto with respect to the
subject matter herein contained, and supersedes all prior agreements,
correspondence, arrangements and understandings relating to the subject
matter hereof.
13.4 Further Assurances. Borrower and Guarantor agree (a) to
furnish upon Lender's request such further information, (b) to execute
and deliver such other documents, and (c) to do such other acts and
things, all as Lender may reasonably request for the purpose of carrying
out the intent of this Loan Agreement and the documents referred to in
this Loan Agreement.
13.5 Governing Law. This Loan Agreement and all other Loan
Documents are executed and delivered in, and shall be governed by the
laws of, the Commonwealth of Kentucky, without giving effect to any
conflict of law rule or principle that might require the application of
the laws of another jurisdiction.
13.6 Headings. The headings in this Loan Agreement are included
for purposes of convenience only and shall not be considered a part of
this Loan Agreement in construing or interpreting any provision hereof.
13.7 Invalidity of Provisions; Severability. If any provision of
this Loan Agreement or the application thereof to any person or
circumstance shall to any extent be held in any proceeding to be invalid,
illegal or unenforceable, the remainder of this Loan Agreement, or the
application of such provision to persons or circumstances other than
those to which it was held to be invalid, illegal or unenforceable, shall
not be affected thereby, and shall be valid, legal and enforceable to the
fullest extent permitted by law, but only if and to the extent such
enforcement would not materially and adversely frustrate the parties'
essential objectives as expressed herein. Notwithstanding the foregoing,
each party hereto agrees that it has reviewed the provisions of this Loan
Agreement, and that the same, taken as a whole, are fair and reasonable.
13.8 Limitation on Interest. It is the intention of the parties
hereto to conform strictly to applicable usury laws. Accordingly, all
agreements between Borrower and Lender with respect to the Term Note and
the Loan Documents are hereby expressly limited so that in no event,
whether by reason of acceleration of maturity or otherwise, shall the
amount paid or agreed to be paid to Lender or charged by Lender for the
use, forbearance or detention of the money to be lent hereunder or
otherwise, exceed the maximum amount allowed by law. If the Term Loan
would be usurious under applicable law, then, notwithstanding anything
to the contrary in the Term Note or in the Loan Documents: (a) the
<page 27>
aggregate of all consideration which constitutes interest under
applicable law that is contracted for, taken, reserved, charged or
received under the Term Note or the Loan Documents shall under no
circumstances exceed the maximum amount of interest allowed by applicable
law, and any excess shall be credited on the Term Note by the holder
thereof or, at Lender's option, refunded to Borrower; and (b) if maturity
is accelerated by reason of an election by Lender, or in the event of an
prepayment, then any consideration which constitutes interest may never
include more than the maximum amount allowed by applicable law. In such
case, excess interest, if any provided for in the Term Note, the Loan
Documents or otherwise, to the extent permitted by applicable law, shall
be amortized, prorated, allocated and spread from the date of advance
until payment in full so that the actual rate of interest is uniform
through the term hereof. If such amortization, proration, allocation and
spreading is not permitted under applicable law, then such excess
interest shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
on the Term Note or, at Lender's option, refunded to Borrower. The terms
and provisions of this Section shall control and supersede every other
provision of the Term Note and Loan Documents. The Term Note is a
contract made under and shall be construed in accordance with and
governed by the laws of Kentucky, except that if at any time the laws of
the United States America permit Lender to contract for, take, reserve,
charge or receive a higher rate of interest than is allowed by the laws
of Kentucky (whether such federal laws directly so provide or refer to
the law of any state), then such federal laws shall to such extent govern
as to the rate of interest which Lender may contract for, take, reserve,
charge or receive under the Term Note.
13.9 Binding Effect. The provisions of this Loan Agreement shall
bind and benefit Borrower, Guarantor and Lender and their respective
successors, heirs, personal representatives and assigns, including each
subsequent holder, if any, of the Term Note or any other Indebtedness.
13.10 Modifications. This Loan Agreement may be modified only in
writing executed by Lender and Borrower, and Guarantor shall
automatically be bound by all such modifications even though he does not
join therein or consent thereto, Guarantor hereby agreeing that
Borrower's execution thereof shall be irrevocably and conclusively deemed
Guarantor's consent thereto as Guarantor's irrevocable attorney-in-fact,
even though it does not so state.
13.11 Time of Essence. Time is of the essence in the performance
by Borrower and Guarantor of all the obligations set forth in this Loan
Agreement and in all of the other Loan Documents.
13.12 Waiver. The rights and remedies of Lender hereunder are
cumulative and not alternative. Neither the failure nor any delay by
Lender in exercising any right, power, or privilege under this Loan
Agreement or the documents referred to in this Loan Agreement will
<page 28>
operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any
other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. Each such right,
power, remedy or privilege may be exercised by Lender, either
independently or concurrently with others, and as often and in such order
as Lender may deem expedient. To the maximum extent permitted by
applicable law, no waiver that may be given by a party will be applicable
except in the specific instance for which it is given. No waiver or
consent granted by Lender with respect to this Loan Agreement, the
Indebtedness or any Security Instrument or related writing shall be
binding upon Lender, unless specifically granted in writing by a duly
authorized officer of Lender, which writing shall be strictly construed.
13.13 Interpretation. The parties hereto hereby agree that this
Loan Agreement shall be so interpreted to give effect and validity to all
the provisions hereof to the fullest extent permitted by law.
13.14 Assignment. Neither the Borrower nor Guarantor may assign
any of their rights under the Loan Agreement or any of the Loan Documents
to any other party. Lender may assign its rights and obligations under
this Loan Agreement and the other Loan Documents, in whole or in part,
without the need for consent from Borrower or Guarantor, and such
assignee shall be entitled to the benefits of Lender's rights hereunder.
13.15 Survival of Covenants, Agreements, Warranties and
Representations. All covenants, agreements, warranties and
representations made by Borrower and Guarantor herein shall survive the
making of the Term Loan and delivery of the Term Note, this Loan
Agreement and any and all Security Instruments for the Term Note and
other Indebtedness, and shall be deemed to be continuing covenants,
agreements, representations and warranties at all times while any portion
of the Indebtedness, including the Term Note, remains unpaid.
13.16 Bank Boston's Interest in Stock. Notwithstanding any terms
or provisions herein, the rights and interests of Lender in any of the
Stock pledged by Borrower to Bank Boston shall be subject to Bank
Boston's rights and interests in the Stock, as set forth in agreements
executed in connection with Borrower's indebtedness to Bank Boston and
in the Letter Agreement between Bank Boston, Borrower and Lender, the
form of which is attached hereto and made a part hereof as Exhibit E.
14. Jury Trial Waiver. BORROWER AND GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION OR ANY OTHER PROCEEDING
BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OUT OF ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER WRITTEN OR ORAL) OR ACTIONS OF THE
BORROWER, GUARANTOR OR LENDER.
<page 29>
In Witness Whereof, the parties have entered into this Loan
Agreement as of the date first written above.
IMAGINE INVESTMENTS, INC.
By:__________________________________
Title:
("Lender")
WILSON FINANCIAL COPRORATION
By:__________________________________
Title:
("Borrower")
<page 30>
EXHIBIT D
IN-KIND NOTE
$____________ Louisville, Kentucky
February ___, 2000
FOR VALUE RECEIVED, Wilson Financial Corporation, a Florida corporation
with principal office and place of business in Jacksonville, Florida
("Maker"), promises and agrees to pay to the order of Imagine Investments,
Inc., a Delaware corporation, or to any holder of this Note ("Payee"),
the principal sum of ____________________________ DOLLARS ($___________),
together with interest upon such principal balance at the rate provided
below, in legal tender of the United States of America. The unpaid
principal balance of, and all accrued interest on, this Note shall be due
and payable in full on February 28, 2001, which date shall be the final
maturity date of this Note.
1. Interest Rate. The principal balance of this Note shall bear
interest at the rate of twelve percent (12%) per annum. All parties
hereto hereby specifically agree that this Note has been delivered in the
Commonwealth of Kentucky and that the laws of the Commonwealth of
Kentucky shall govern this Note. All payments under this Note shall be
paid to Payee at 8150 North Central Expressway, Suite 1901, Dallas, Texas
75206, or to such other person or at such other place as may be
designated in writing by Payee or any subsequent holder of this Note.
2. Payment of Interest. All accrued interest on the principal
balance of this Note shall be paid at maturity. All interest on the
principal balance of this Note shall be computed on the basis of the
actual number of days elapsed over an assumed year of 360 days.
3. Repayment of Principal. The principal balance of this Note shall
be paid in full at the maturity date or earlier acceleration of this
Note. This Note may be prepaid in whole or in part at any time and from
time to time without premium or penalty.
4. Overdue Payments; Default Rate. All overdue payments of
principal or interest on this Note shall bear additional interest until
paid in full at the rate per annum (calculated on the basis of an assumed
year of 360 days as aforesaid) of five percent (5%) per annum in excess
of the rate otherwise payable under the terms of this Note or the highest
rate allowed by applicable law, whichever is lower, and shall be due and
payable on demand of the holder hereof.
<page 31>
5. Security. This Note is secured by: (i) a lien upon, and
security interest in, certain shares of stock of Riverside Group, Inc.,
owned by Maker, pursuant to a Stock Pledge Agreement of even date
herewith between Maker and Payee, (ii) the personal guaranty of Guarantor
pursuant to the Unconditional Guaranty Agreement of even date herewith,
and (iii) a lien upon, and security interest in, certain shares of stock
of Maker pursuant to a Stock Pledge Agreement of even date herewith
between Guarantor and Payee. This Note has been issued pursuant to the
Loan Agreement (such Loan Agreement and the foregoing Stock Pledge
Agreements and Unconditional Guaranty Agreement are hereinafter
collectively referred to as the "Security Documents"), and is entitled to
all the benefits of the Security Documents.
6. Events of Default. Each of the following events shall constitute
an event of default under this Note, the occurrence of any of which shall
entitle the holder hereof to declare the entire principal balance of this
Note, together with all accrued interest and all other liabilities,
indebtedness and obligations of Maker and/or Guarantor to Payee, whether
now existing or hereafter created, to be immediately due and payable, and
to take any and all action allowed Payee by law or equity, under the
terms of this Note, under the terms of any of the Security Documents, and
under the terms of any other agreements between Maker and/or Guarantor
and Payee:
(a) The failure of Maker to make any payment of principal or
interest provided for in this Note on the date upon which
it is due; or
(b) The occurrence of an Event of Default as described in this
Note or any Security Document;
7. No Waiver, Cumulative Remedies. The failure of Payee to exercise
any of its rights and remedies shall not constitute a waiver of the right
to exercise them at that or any other time. All rights and remedies of
Payee in the event of a default shall be cumulative to the greatest
extent permitted by law.
8. Expenses. If there is any default under this Note or any
Security Document and this Note is placed in the hands of any attorney
for collection or is collected through any court including any bankruptcy
court, Maker promises and agrees to pay to Payee its attorneys fees,
court costs, and all other expenses incurred in collecting or attempting
to collect or securing or attempting to secure this Note as provided by
the laws of the Commonwealth of Kentucky, or any other state where the
collateral or any part of it is situated. This section shall be deemed
supplemental to, and not to be in substitution for, that section of any
Security Document dealing with the reimbursement of expenses.
9. Waivers. Maker waives (a) presentment, demand, notice of
dishonor, protest, notice of protest and non-payment, and (b) all
exemptions to which Maker may now or hereafter be entitled under the laws
of the Commonwealth of Kentucky, of any other state, or of the United
States, and agrees that Payee shall have the right (i) to grant Maker or
<page 32>
any guarantor of this Note any extension of time for payment of this Note
or any other indulgence or forbearance whatsoever, and (ii) to release
any security for or guarantor of payment of this Note, without in any way
affecting the liability of Maker under this Note or the Guarantor under
the Security Documents, and without waiving any rights Payee may have
under this Note or by virtue of the laws of the Commonwealth of Kentucky,
or any other state of the United States.
10. Time of Essence. Time is of the essence in the payment and
performance of all of Maker's obligations under this Note, the Security
Documents and all documents securing this Note or relating hereto.
11. Venue and Jurisdiction. Maker further agrees that in the event
of any litigation for collection of or relating to this note,
jurisdiction and venue shall be proper and appropriate in any court
sitting in Louisville or Jefferson County Kentucky, and Maker hereby
consents to such jurisdiction and venue.
12. Waiver of Jury Trial. MAKER VOLUNTARILY AND INTENTIONALLY WAIVES
AND SHALL NOT ASSERT ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING FROM OR CONNECTED WITH THIS NOTE, THE
SECURITY DOCUMENTS OR ANY AGREEMENT MADE OR CONTEMPLATED TO BE MADE IN
CONNECTION THEREWITH, OR ANY COURSE OF DEALING, COURSE OF CONDUCT,
STATEMENT OR ACTIONS OF ANY PARTY IN CONNECTION WITH THIS NOTE.
13. Limitation on Interest. It is the intention of the parties
hereto to conform strictly to applicable usury laws. Accordingly, all
agreements between Maker and Payee with respect to this Note and the Loan
Documents, as defined in the Loan Agreement, are hereby expressly limited
so that in no event, whether by reason of acceleration of maturity or
otherwise, shall the amount paid or agreed to be paid to Payee or charged
by Payee for the use, forbearance or detention of the money to be lent
hereunder or otherwise, exceed the maximum amount allowed by law. If
this loan would be usurious under applicable law, then, notwithstanding
anything to the contrary in this Note or in the Loan Documents: (a) the
aggregate of all consideration which constitutes interest under
applicable law that is contracted for, taken, reserved, charged or
received under this Note or the Loan Documents shall under no
circumstances exceed the maximum amount of interest allowed by applicable
law, and any excess shall be credited on this Note by the holder thereof,
or, at Payee's option, refunded to Maker; and (b) if maturity is
accelerated by reason of an election by Payee, or in the event of an
prepayment, then any consideration which constitutes interest may never
include more than the maximum amount allowed by applicable law. In such
case, excess interest, if any provided for in this Note, the Loan
Documents or otherwise, to the extent permitted by applicable law, shall
be amortized, prorated, allocated and spread from the date of advance
until payment in full so that the actual rate of interest is uniform
through the term hereof. If such amortization, proration, allocation and
spreading is not permitted under applicable law, then such excess
interest shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
on this Note, or, at Payee's option, refunded to Maker. The terms and
provisions of this Section shall control and supersede every other
provision of this Note and the Loan Documents. This Note is a contract
<page 33>
made under and shall be construed in accordance with and governed by the
laws of Kentucky, except that if at any time the laws of the United
States America permit Payee to contract for, take, reserve, charge or
receive a higher rate of interest than is allowed by the laws of Kentucky
(whether such federal laws directly so provide or refer to the law of any
state), then such federal laws shall to such extent govern as to the rate
of interest which Payee may contract for, take, reserve, charge or
receive under this Note.
14. Partial Invalidity. If any one or more of the provisions of this
Note, or the applicability of any such provision to a specific situation,
shall be held invalid or unenforceable, such provision shall be modified
to the minimum extent necessary to make it or its application valid and
enforceable, and the validity and enforceability of all other provisions
of this Note and all other applications of any such provision shall not
be affected thereby. In the event such provision(s) cannot be modified
to make it or them enforceable, the invalidity or unenforceability of any
such provision(s) of this Note shall not impair the validity or
enforceability of any other provision of this Note.
15. Binding Effect. This Note shall bind the successors and assigns
of Maker and shall inure to the benefit of Payee and its successors and
assigns. Maker shall not assign or allow the assumption of its rights
and obligations hereunder without Payee's prior written consent.
In Witness Whereof, the undersigned Maker has executed this Note as of
the date first above written.
Wilson Financial Corporation
By: ______________________________
______________________
Witness Title: ______________________________
("Maker")
______________________
Witness
<page 34>
TERM PROMISSORY NOTE
$6,000,000.00 Louisville, Kentucky
February 25, 1999
FOR VALUE RECEIVED, Wilson Financial Corporation, a Florida corporation
with principal office and place of business in Jacksonville, Florida
("Maker"), promises and agrees to pay to the order of Imagine Investments,
Inc., a Delaware corporation, or to any holder of this Note ("Payee"),
the principal sum of SIX MILLION DOLLARS ($6,000,000.00), together with
interest upon such principal balance at the rate provided below, in legal
tender of the United States of America. The unpaid principal balance of,
and all accrued interest on, this Note shall be due and payable in full
on December 31, 2001, which date shall be the final maturity date of this
Note. All payments under this Note shall be paid to Payee at 8150 North
Central Expressway, Suite 1901, Dallas, Texas 75206, or to such other
person or at such other place as may be designated in writing by Payee
or any subsequent holder of this Note.
1. Interest Rate. The principal balance of this Note shall bear
interest at the rate of ten percent (10%) per annum. All parties hereto
hereby specifically agree that this Note has been delivered in the
Commonwealth of Kentucky and that the laws of the Commonwealth of
Kentucky shall govern this Note.
2. Disbursements of Principal. Payee may make periodic
disbursements of principal to Maker as hereinafter requested by Maker in
writing from time to time, pursuant to a Loan Agreement among Maker,
Payee and J. Steven Wilson ("Guarantor"), of even date herewith (the "Loan
Agreement"). This is not a revolving note, and amounts disbursed
hereunder may not be paid down and subsequently reborrowed by Maker.
3. Payment of Interest. All accrued interest on the principal
balance of this Note shall be payable annually on each February 28th
commencing February 28, 2000, and at the maturity of this Note. All
interest on the principal balance of this Note shall be computed on the
basis of the actual number of days elapsed over an assumed year of 360
days. Maker may pay the first year's interest by executing an in-kind
note in the form attached to the Loan Agreement as Exhibit D. Payee
agrees that if it is "impractical" for both Maker and Guarantor to make
annual interest payments at any time hereunder except at the end of the
first year and at maturity, Payee will not be entitled to foreclose on
the stock pledged to Payee pursuant to the "Security Documents" (as
hereinafter defined), nor will Payee be entitled to accelerate this Note;
but nonetheless, interest not paid when due and payable will constitute
overdue interest and shall bear interest as set forth in Section 6 hereof
for overdue payments. The term, "impractical," as used in the preceding
sentence, shall not include Maker's and/or Guarantor's payment(s) of
other obligations in lieu of payment of interest hereunder - i.e.,
Maker's election to pay other obligations shall not be sufficient to
relieve Maker and/or Guarantor of its obligation to make annual payments
of interest hereunder.
<page 35>
4. Repayment of Principal. The principal balance of this Note shall
be paid in full at the maturity date or earlier acceleration of this
Note. No portion of the principal balance of this Note, nor any accrued
interest thereon, may be prepaid at any time, in whole or in part,
without the written consent of Payee.
5. Application of Payments. Payments made under this Note shall be
applied, at the holder's sole option, first to any expenses or sums
advanced by Payee in respect of and in accordance with the terms of this
Note or the Loan Agreement or under the terms of any document or
instrument securing the repayment of this Note; second, to accrued but
unpaid interest upon the principal balance of this Note; and then to the
principal balance of this Note.
6. Overdue Payments; Default Rate. All overdue payments of
principal or interest on this Note shall bear additional interest until
paid in full at the rate per annum (calculated on the basis of an assumed
year of 360 days as aforesaid) of five percent (5%) per annum in excess
of the rate otherwise payable under the terms of this Note or the highest
rate allowed by applicable law, whichever is lower, and shall be due and
payable on demand of the holder hereof.
7. Security. This Note is secured by: (i) a lien upon, and
security interest in, certain shares of stock of Riverside Group, Inc.,
owned by Maker, pursuant to a Stock Pledge Agreement of even date
herewith between Maker and Payee, (ii) the personal guaranty of Guarantor
pursuant to the Unconditional Guaranty Agreement of even date herewith,
and (iii) a lien upon, and security interest in, certain shares of stock
of Maker pursuant to a Stock Pledge Agreement of even date herewith
between Guarantor and Payee. This Note has been issued pursuant to the
Loan Agreement (such Loan Agreement and the foregoing Stock Pledge
Agreements and Unconditional Guaranty Agreement are hereinafter
collectively referred to as the "Security Documents"), and is entitled to
all the benefits of the Security Documents.
8. Events of Default. Each of the following events shall constitute
an event of default under this Note, the occurrence of any of which shall
entitle the holder hereof to declare the entire principal balance of this
Note, together with all accrued interest and all other liabilities,
indebtedness and obligations of Maker and/or Guarantor to Payee, whether
now existing or hereafter created, to be immediately due and payable, and
to take any and all action allowed Payee by law or equity, under the
terms of this Note, under the terms of any of the Security Documents, and
under the terms of any other agreements between Maker and/or Guarantor
and Payee:
(a) The failure of Maker to make any payment of principal or
interest provided for in this Note on the date upon which
it is due; or
(b) The occurrence of an Event of Default as described in this
Note or any Security Document;
9. No Waiver, Cumulative Remedies. The failure of Payee to exercise
any of its rights and remedies shall not constitute a waiver of the right
to exercise them at that or any other time. All rights and remedies of
Payee in the event of a default shall be cumulative to the greatest
extent permitted by law.
<page 36>
10. Expenses. If there is any default under this Note or any
Security Document and this Note is placed in the hands of any attorney
for collection or is collected through any court including any bankruptcy
court, Maker promises and agrees to pay to Payee its attorneys fees,
court costs, and all other expenses incurred in collecting or attempting
to collect or securing or attempting to secure this Note as provided by
the laws of the Commonwealth of Kentucky, or any other state where the
collateral or any part of it is situated. This section shall be deemed
supplemental to, and not to be in substitution for, that section of any
Security Document dealing with the reimbursement of expenses.
11. Waivers. Maker waives (a) presentment, demand, notice of
dishonor, protest, notice of protest and non-payment, and (b) all
exemptions to which Maker may now or hereafter be entitled under the laws
of the Commonwealth of Kentucky, of any other state, or of the United
States, and agrees that Payee shall have the right (i) to grant Maker or
any guarantor of this Note any extension of time for payment of this Note
or any other indulgence or forbearance whatsoever, and (ii) to release
any security for or guarantor of payment of this Note, without in any way
affecting the liability of Maker under this Note or the Guarantor under
the Security Documents, and without waiving any rights Payee may have
under this Note or by virtue of the laws of the Commonwealth of Kentucky,
or any other state of the United States.
12. Time of Essence. Time is of the essence in the payment and
performance of all of Maker's obligations under this Note, the Security
Documents and all documents securing this Note or relating hereto.
13. Venue and Jurisdiction. Maker further agrees that in the event
of any litigation for collection of or relating to this note,
jurisdiction and venue shall be proper and appropriate in any court
sitting in Louisville or Jefferson County Kentucky, and Maker hereby
consents to such jurisdiction and venue.
14. Waiver of Jury Trial. MAKER VOLUNTARILY AND INTENTIONALLY WAIVES
AND SHALL NOT ASSERT ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING FROM OR CONNECTED WITH THIS NOTE, THE
SECURITY DOCUMENTS OR ANY AGREEMENT MADE OR CONTEMPLATED TO BE MADE IN
CONNECTION THEREWITH, OR ANY COURSE OF DEALING, COURSE OF CONDUCT,
STATEMENT OR ACTIONS OF ANY PARTY IN CONNECTION WITH THIS NOTE.
15. Limitation on Interest. It is the intention of the parties
hereto to conform strictly to applicable usury laws. Accordingly, all
agreements between Maker and Payee with respect to this Note and the Loan
Documents, as defined in the Loan Agreement, are hereby expressly limited
so that in no event, whether by reason of acceleration of maturity or
otherwise, shall the amount paid or agreed to be paid to Payee or charged
by Payee for the use, forbearance or detention of the money to be lent
<page 37>
hereunder or otherwise, exceed the maximum amount allowed by law. If
this loan would be usurious under applicable law, then, notwithstanding
anything to the contrary in this Note or in the Loan Documents: (a) the
aggregate of all consideration which constitutes interest under
applicable law that is contracted for, taken, reserved, charged or
received under this Note or the Loan Documents shall under no
circumstances exceed the maximum amount of interest allowed by applicable
law, and any excess shall be credited on this Note by the holder thereof,
or, at Payee's option, refunded to Maker; and (b) if maturity is
accelerated by reason of an election by Payee, or in the event of an
prepayment, then any consideration which constitutes interest may never
include more than the maximum amount allowed by applicable law. In such
case, excess interest, if any provided for in this Note, the Loan
Documents or otherwise, to the extent permitted by applicable law, shall
be amortized, prorated, allocated and spread from the date of advance
until payment in full so that the actual rate of interest is uniform
through the term hereof. If such amortization, proration, allocation and
spreading is not permitted under applicable law, then such excess
interest shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited
on this Note, or, at Payee's option, refunded to Maker. The terms and
provisions of this Section shall control and supersede every other
provision of this Note and the Loan Documents. This Note is a contract
made under and shall be construed in accordance with and governed by the
laws of Kentucky, except that if at any time the laws of the United
States America permit Payee to contract for, take, reserve, charge or
receive a higher rate of interest than is allowed by the laws of Kentucky
(whether such federal laws directly so provide or refer to the law of any
state), then such federal laws shall to such extent govern as to the rate
of interest which Payee may contract for, take, reserve, charge or
receive under this Note.
16. Partial Invalidity. If any one or more of the provisions of this
Note, or the applicability of any such provision to a specific situation,
shall be held invalid or unenforceable, such provision shall be modified
to the minimum extent necessary to make it or its application valid and
enforceable, and the validity and enforceability of all other provisions
of this Note and all other applications of any such provision shall not
be affected thereby. In the event such provision(s) cannot be modified
to make it or them enforceable, the invalidity or unenforceability of any
such provision(s) of this Note shall not impair the validity or
enforceability of any other provision of this Note.
17. Binding Effect. This Note shall bind the successors and assigns
of Maker and shall inure to the benefit of Payee and its successors and
assigns. Maker shall not assign or allow the assumption of its rights
and obligations hereunder without Payee's prior written consent.
In Witness Whereof, the undersigned Maker has executed this Note as of
the date first above written.
Wilson Financial Corporation
By: ______________________________
________________________________
Witness Title: ______________________________
("Maker")
________________________________
Witness
<page 38>
UNCONDITIONAL GUARANTY AGREEMENT
In consideration of the loan evidenced by the Term Promissory Note
made by Wilson Financial Corporation ("Maker") in favor of Imagine
Investments, Inc. ("Payee") dated February 25, 1999, in the original
principal sum of $6,000,000.00 (the "Note"), the undersigned
unconditionally guarantees the prompt payment of (i) the entire principal
balance of the Note, (ii) all accrued interest upon the principal balance
hereof, (iii) late fees, (iv) the amounts, if any, due pursuant to the
In-Kind Note referred to in Section 12 of the Loan Agreement between
Maker, Payee and Guarantor, dated on even date herewith, and (v) all
attorneys' fees and costs and expenses of collection incurred by Payee,
together with the costs and expenses of maintaining and securing
collateral pursuant to all documents and instruments securing repayment
of this Note, when due, whether by acceleration or otherwise regardless
of the genuineness, validity or enforceability of this Note. The
undersigned consents and agrees to be bound by all of the terms of this
Note (as the same may be extended or renewed). The undersigned waives
all rights and subrogation with respect to this Note or any collateral
securing its payment and all rights of recourse or indemnity until this
Note and all other obligations of Maker to Payee shall have been fully
paid. If any payment made by Maker to Payee later deemed to be a
preference or otherwise required to be repaid or returned, the amount of
such return or repayment shall continue to be covered by this Guaranty.
THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT THE UNDERSIGNED MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THE LOAN EVIDENCED BY THIS NOTE OR ANY RELATED LOAN OR LENDING
TRANSACTION OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR PAYEE MAKING THE LOAN EVIDENCED BY THIS NOTE.
THE UNDERSIGNED AGREES THAT THIS GUARANTY SHALL BE AND IS DEEMED TO BE
INCORPORATED INTO AND MADE A PART OF THIS NOTE AS THOUGH A PART THEREOF.
The liability of the undersigned shall in no way be affected by any
renewal or extension of time of payment of the Note and any other
instrument, indebtedness or liability, or by any release or surrender of
other security or collateral or guaranty for the Note, or by delay in
enforcement of payment of the principal or interest or of any security
in connection therewith, or by any other indulgence Payee may grant
Maker.
The undersigned hereby declares to and covenants with Payee, its
successors or assigns, that the undersigned has no defense whatever to
any action, suit or other proceedings, at law or otherwise, that may be
instituted under or on account of this Guaranty, including all questions
as to the validity, regularity or enforceability of the obligation of
Maker.
Notwithstanding the death of the undersigned, this instrument shall
be binding on the estate of the decedent as to any obligation incurred
either before or after or extended after such death.
<page 39>
Payee shall not be bound to exhaust its recourse against or upon the
security or collateral it may hold or against any other person before
being entitled to payment from the undersigned or of the amount hereby
guaranteed. This Guaranty Agreement constitutes a guaranty of payment
and not of collection.
Payee is hereby authorized and empowered, at its option to appropriate
and apply to the payment and extinguishment of the liability of the
undersigned under this Guaranty Agreement at any time after such
liability shall become payable, any and all monies or other property of
the undersigned and the proceeds thereof (including safekeeping or
pledge) for this or any other liability of the undersigned to the Payee,
and including any balance on deposit or otherwise for the account of, or
to the credit of, or belonging to, the undersigned.
Payee is hereby authorized and empowered, at its option, at any time
after the liability created by the foregoing guaranty becomes payable,
to sell assign and deliver any securities or property at any time given
unto or left in the possession or custody of Payee for any purpose
(including safekeeping or pledge) for this or any other liability of the
undersigned or in which any of the undersigned may have an interest, at
public or private sale, for cash, upon credit, or for future delivery,
all at the option of Payee or any of its officers, without demand,
advertisement, or notice, all of which are hereby expressly waived.
Upon any sale or sales at public or private sale, above provided for,
Payee, its successors or assigns, may bid for and/or purchase the whole
or any part of such securities or property free from any right of
redemption, which is hereby waived and released.
In case of any sale by Payee of any of said securities or property on
credit or for future delivery, the securities and property sold may be
retained by Payee until the selling price is paid by the purchaser and
Payee shall incur no liability in case of failure of the purchaser to
take up and pay for the securities or property so sold. In case of any
such failure the securities or property may be again sold.
Notwithstanding any provisions of this Guaranty to the contrary, the
maximum amount which Guarantor shall be required to pay hereunder, shall
be the total and aggregate sum of $9,000,000 in U.S. Dollars.
Notwithstanding the foregoing maximum liability of Guarantor, Guarantor
guarantees payment of interest on the indebtedness incurred pursuant to
this Guaranty and all fees, charges and costs of collecting the
indebtedness, including reasonable attorneys' fees. This Guaranty shall
terminate on December 31, 2005 ("Termination Date"). Said Termination
Date shall not affect the liability of the Guarantor with respect to (a)
obligations created or incurred prior to the Termination Date; or (b)
extensions or renewals of, interest accruing on, or fees, costs or
expenses incurred with respect to the obligations on or after the
Termination Date.
Guarantor agrees that in the event of any litigation for collection
of or relating to this Guaranty, jurisdiction and venue shall be proper
and appropriate in any court sitting in Louisville or Jefferson County
Kentucky, and Guarantor hereby consents to such jurisdiction and venue.
_____________________________ _____________________________________
Witness J. Steven Wilson
("Guarantor")
_____________________________
Witness
<page 40>
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement is entered into and effective as of
February 25, 1999, by and between: (i) Wilson Financial Corporation, a Florida
corporation having its principal office in Jacksonville, Florida
("Wilson) (ii) J. Steven Wilson, an individual of Jacksonville, Florida
("Steven") (Wilson and Steven are sometimes collectively referred to
herein as "Borrower," and the term"Borrower" also means each of Wilson
and/or Steven), and (ii) Imagine Investments, Inc., a Delaware corporation
having its principal office in Dallas, Texas ("Lender").
Recitals:
A. Pursuant to the terms of that certain Loan Agreement of even date
herewith among Wilson, Lender and Steven, and that certain Term
Promissory Note of even date herewith, executed by Wilson in favor of
Lender in the face principal amount of Six Million Dollars
($6,000,000.00) (the "Note"), and that has been guaranteed by Steven, as
the same may hereafter be amended or otherwise modified from time to time
in writing by the parties thereto, Lender has agreed to extend a term
loan to Wilson in the amount of Six Million Dollars ($6,000,000) (the
"Term Loan").
B. In order to induce Lender to make the Term Loan, without which
inducement Lender would be unwilling to do so, Borrower has agreed to
pledge all of the shares of the issued and outstanding common capital
stock of Riverside Group, Inc. (the "Corporation") owned by Borrower to
Lender, to secure the payment of the Term Loan and all other obligations
of Borrower to Lender, including without limitation, the In-Kind Note
referred to in Section 12 of the Loan Agreement.
Agreement:
Now, Therefore, the parties hereby agree as follows:
1. Pledge and Deposit of Shares. Borrower hereby pledges, assigns and
grants a security interest to Lender in 2,617,243 shares of the stock of
Riverside Group, Inc., a Florida corporation (the "Stock"), as represented
by the Certificates now listed on Exhibit A attached hereto and made a
part hereof, now standing in Borrower's name and constituting
approximately forty-eight percent (48%) of the issued and outstanding
capital stock of the Corporation, all as collateral security for the full
and punctual payment and due performance by Borrower of (i) the Note,
and (ii) all other liabilities, obligations and indebtedness of whatever
kind of Borrower to Lender, whether created directly or acquired by
Lender by assignment or otherwise, whether now existing or hereafter
created, arising or acquired, absolute or contingent, joint or several,
due or to become due, and including, but not limited to, future advances
by Lender to Borrower. All of the foregoing are referred to collectively
herein as the "Secured Obligations."
2. Certificates and Prior Pledge. The Certificates listed on Exhibit
B attached hereto and made a part hereof, representing 392,282 shares of
the Stock in the aggregate (the "First Priority Stock"), have been
delivered herewith by Borrower to Lender, together with duly executed
<page 41>
blank stock powers attached thereto. The Certificates listed on Exhibit
C attached hereto and made a part hereof, representing 2,224,961 shares
of the Stock (the "Second Priority Stock"), is currently in the possession
of Bank Boston, N.A. (the "Prior Lender"), and such 2,224,961 shares of
the Stock have been previously pledged by Borrower to Prior Lender, to
secure payment of Borrower's obligations to Prior Lender (the "Prior
Lender's Loan"). Borrower agrees and acknowledges that Lender has a
first lien on and security interest in the First Priority Stock and, at
present, a second lien on and security interest in the Second Priority
Stock, which will automatically become a first lien on and security
interest when the Prior Lender releases such Stock. Notwithstanding any
provision herein, the Lender's rights with respect to the Second Priority
Stock shall be subject to the Prior Lender's rights in the Second
Priority Stock.
Borrower agrees to cause Prior Lender to release portions of the
2,224,961 shares of the Second Priority Stock referred to above from the
lien and security interest in favor of Prior Lender, as and when Borrower
makes principal payments on the Prior Lender Loan, on a pro rata basis,
such that the ratio of the number of shares of Second Priority Stock
pledged to the Prior Lender to the outstanding principal loan balance of
the Prior Lender Loan shall remain constant. As of the date hereof, the
outstanding principal balance of the Prior Lender Loan is Three Million
Dollars ($3,000,000,00), so the ratio is 1.3483 (3,000,000 / 2,224,961
= 1.3483). In other words, Borrower shall cause Prior Lender to release
one (1) share of the Second Priority Stock pledged to Prior Lender for
each $1.35 of reduction of principal in the Prior Lender Loan. For
example, upon a principal reduction in the amount of $500,000, Borrower
shall cause Prior Lender to release 370,370 shares of Second Priority
Stock (500,000/1.35 = 370,370) and shall cause the Prior Lender to
deliver original Certificates representing such released shares directly
to Lender, and Borrower acknowledges and agrees that immediately upon
release of such shares by Prior Lender, Lender shall have a first lien
on and security interest in such shares, and such shares shall
automatically then be deemed to be First Priority Stock.
3. Further Pledge and Deliveries. The certificates or other
instruments evidencing all new shares of capital stock and all other securities,
rights, warrants, options and the like hereafter created in respect of
the Stock, whether by stock split, stock dividend, merger, consolidation
or otherwise, shall be delivered by Borrower to, and shall be held by,
Lender under the terms and conditions of this Stock Pledge Agreement and
subject to the pledge and security interest herein granted (subject,
however, to the rights of the Prior Lender with respect to the Second
Priority Stock), and the term, "Stock," as used herein, shall be deemed
to include all such new shares, securities, rights, warrants, options and
the like. At its sole option, Lender may transfer the shares of Stock
into its own name.
4. Covenants. During the period the Stock is being held as security
hereunder, Borrower shall not, without the prior written consent of
Lender, allow the Corporation to (i) issue any additional capital stock
<page 42>
or other equity securities of any kind or options, subscription rights,
warrants or other instruments with respect thereto or any other
instruments convertible into shares of its capital stock, or sell or
issue any treasury stock, (ii) merge into or with or consolidate with any
other corporation or business or otherwise participate in any
reorganization or sell or lease to others all or substantially all of its
assets, (iii) amend its Articles of Incorporation or By-Laws in any
manner that would have a material adverse effect on Lender's rights with
respect to the Stock, or liquidate or dissolve or take any steps to
effect same, or (iv) effect a recapitalization or alter its capital
structure.
5. Voting Rights; Dividends, Etc. So long as no Event of Default
shall have occurred, Borrower shall be entitled to exercise any and all voting
and/or consensual rights and powers relating or pertaining to the Stock
or any part thereof for any purpose not inconsistent with the terms of
this Stock Pledge Agreement. All dividends and distributions, regardless
whether in cash, stock, rights, options or other property, and all stock
splits, stock dividends and the like and the proceeds of all redemptions
and liquidations that are made, paid or declared with respect to the
Stock shall be paid directly to Lender, and shall, at Lender's sole
election, either be applied as a payment on the Secured Obligations or
held by Lender as additional security for the Secured Obligations (and
Borrower shall execute all instruments in connection therewith as are
requested by Lender).
6. Status of the Stock. Borrower hereby represents and warrants to
Lender that (a) the Stock is validly issued and outstanding, fully paid
and non-assessable, and constitutes approximately forty-eight percent
(48%) of the issued and outstanding capital stock of the Corporation;
(b) Borrower is the registered and absolute beneficial owner of
approximately forty-eight percent (48%) of the issued and outstanding
capital stock of the Corporation; (c) except for the prior pledge of
2,224,961 shares of the Stock to Prior Lender as described in Section 2,
all the Stock is free and clear of liens, charges and encumbrances in
favor of persons other than Lender; (d) subject to the rights of the
Prior Lender, Borrower has the full power and authority to pledge the
Stock to Lender pursuant to this Stock Pledge Agreement; and (e) the
Corporation is a corporation validly existing under the law of the State
of Florida. No part of the Stock shall be sold, transferred or further
assigned by Borrower without the prior written consent of Lender, which
consent may be arbitrarily withheld so long as this Stock Pledge
Agreement is in effect.
7. Maintenance of Priority of Pledge. Borrower shall be liable for
and shall from time to time pay and discharge all taxes, assessments and
governmental charges imposed upon the Stock by any federal, state or
local authority, the liens of which would or might be held prior to the
right of Lender in and to the Stock or which are imposed on the holders
<page 43>
and/or registered owners of the Stock. Borrower shall not, at any time
while this Stock Pledge Agreement is in effect, do or suffer any act or
thing whereby the rights of Lender in the Stock would or might be
materially impaired or diminished. Borrower shall execute and deliver
such further documents and take such further actions as may be required
to confirm the rights of Lender in and to the Stock or otherwise to
effectuate the intention of this Stock Pledge Agreement. Borrower shall
perform all terms of its indebtedness and obligations to Prior Lender,
and shall pay all of such indebtedness and related obligations according
to their terms.
8. Events of Default. Each of the following shall be deemed an "Event
of Default" hereunder:
8.1 Cross Default. The occurrence of any Event of Default under
the Note or any "Security Document," as such term is defined in the Note,
or under any other related instrument or agreement; or
8.2 Default Hereunder. The occurrence of any default of any kind
whatsoever under the terms, covenants and conditions of this Stock Pledge
Agreement; or
8.3 Breach of Covenants. If any covenant, representation or
warranty made in this Stock Pledge Agreement or in any other Security
Document or related instruments or agreements executed by Borrower in
connection with the Term Loan shall prove to be untrue and misleading in
any respect; or
8.4 Default Under Other Financing. If Borrower is in default or
breach of its obligations to Prior Lender beyond any applicable period
of grace for cure of such default or breach.
9. Remedies Upon Default. Upon the occurrence of any Event of Default
referred to in Section 8 above, Lender shall have all rights and remedies
in and against the Stock and otherwise of a secured party under the
Uniform Commercial Code as enacted in the Commonwealth of Kentucky and
the State of Florida (the "UCC") and all other applicable laws, and shall
also have all of the rights provided herein, in the Note and in all other
Security Documents, all of which rights and remedies shall be cumulative
to the fullest extent permitted by law. In connection with the
foregoing, Lender shall have the right:
9.1 Voting Rights. To exercise all voting rights and privileges
whatsoever with respect to the Stock, and to that end Borrower hereby
constitutes Lender as its proxy and attorney-in-fact for all purposes of
voting the Stock, and this appointment shall be deemed coupled with an
interest and is and shall be irrevocable until the Secured Obligations
have been fully paid and this Stock Pledge Agreement terminated, and all
persons whatsoever shall be conclusively entitled to rely upon Lender's
verbal or written certification that it is entitled to vote the Stock
hereunder. Borrower shall execute and deliver to Lender any and all
<page 44>
additional proxies and powers of attorney that Lender may desire in order
to vote more effectively the Stock in its own name. Upon any Event of
Default hereunder, Lender may vote the Stock to remove the directors and
officers of the Corporation and to elect new such officers and directors
who shall thereafter manage the affairs of the Corporation, operate any
of its properties, carry on any business, and otherwise take any action
with respect thereto as they shall deem necessary and appropriate, and
may also liquidate the Corporation and its business, and may authorize
the borrowing of money in the name of the Corporation and the pledge of
its assets to secure such borrowing.
9.2 Right of Sale. To declare the Note and the other Secured
Obligations immediately due and payable in full, and to sell the Stock
in one or more lots, and from time to time, upon ten (10) business days'
prior to written notice to Borrower of the time and place of sale (which
notice Borrower hereby conclusively agrees is commercially reasonable),
for cash or upon credit or for future delivery, Borrower hereby waiving
all rights, if any, of marshaling the Stock and any other security for
the payment of the Note and other Secured Obligations, and at the option
and in the sole discretion of Lender, to either:
(i) Sell the Stock at a public sale or sales, including
a sale at or on any broker's board or stock exchange; or
(ii) Sell the Stock at a private sale or sales.
Lender may bid for and acquire the Stock or any portion thereof at any
public sale, free from any redemption rights of Borrower, and in lieu of
paying cash therefor, may make settlement for the selling price of the
Stock or any part thereof by crediting the net selling price of the Stock
against the Note and other Secured Obligations, after deducting all of
Lender's costs and expenses of every kind and nature therefrom, including
Lender's attorneys' fees incurred in connection with realizing upon the
Stock and enforcing the Security Documents and the Note, provided the
same is not prohibited by the laws of the Commonwealth of Kentucky.
From time to time Lender may, but shall not be obligated to, postpone
the time of any proposed sale of any of the Stock which has been the
subject of a notice as provided above, and also, upon ten (10) days'
prior written notice to Borrower (which notice Borrower conclusively
agrees is commercially reasonable), may change the time and/or place of
such sale.
In the case of any sale by Lender of the Stock or any portion thereof
on credit or for future delivery, which may be elected at the option and
in the sole discretion of Lender, the Stock so sold may, at the sole
option of Lender, either be delivered to the purchaser or retained by
Lender until the selling price is paid by the purchaser, but in either
event Lender shall incur no liability, to Borrower or otherwise, in case
of failure of the purchaser to take up and pay for the Stock so sold.
In case of any such failure, such Stock may be sold again by Lender in
the manner provided in this Section 9.
<page 45>
Borrower covenants and agrees that, during any period of sale or
liquidation of the Stock by Lender, Borrower shall not sell any other
stock of the Corporation if such sale would restrict or limit Lender's
sale of the Stock under Rule 144 or other Rule of the Securities and
Exchange Commission or if such sale by Borrower would cause or contribute
to a decline in the share price of the Stock. Borrower further agrees
in the event of any such sale or liquidation by Lender, to execute any
and all forms, including, but not limited to, Forms 144 and customary
broker's and seller's representation letters, to enable Lender to effect
the sale of the Stock. Borrower shall further take and shall cause the
Corporation to take all necessary actions to remove any restrictive
legend affecting the Stock, and to assist in the effectuation of the sale
of the Stock including, at Borrower's expense, the supplying of opinions
of counsel customarily required to effect such sales.
9.3 Costs and Expenses. After deducting all of Lender's costs and
expenses of every kind, including, but not limited to, legal fees and
registration (Securities and Exchange Commission and other) fees and
expenses, if any, incurred in connection with the sale of the Stock,
Lender shall apply the residue of the proceeds of any sale or sales of
the Stock against the Note and the other Secured Obligations, in the
order of priority elected by Lender. Lender shall not incur any
liability to Borrower or otherwise as a result of the sale of the Stock
at any private sale or sales, and Borrower hereby waives any claim
arising by reason of (i) the fact that the price or prices for which the
Stock or any portion thereof is sold at such private sale or sales is
less than the price which would have been obtained at a public sale or
sales or is less than the amount due under the Note and other obligations
secured hereby, even if Lender accepts the first offer received and does
not offer the Stock or any portion thereof to more than one offeree, (ii)
any delay by Lender in selling the Stock following an Event of Default
hereunder, even if the price of the Stock thereafter declines, or (iii)
the immediate sale of the Stock upon the occurrence of an Event of
Default hereunder, even if the price of the Stock should thereafter
increase. Borrower shall remain liable for any deficiency remaining due
under the Note, this Stock Pledge Agreement, any of the other Security
Documents or any related documents or instruments.
10. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (i) upon being
delivered personally (or by confirmed telefax or other electronic
delivery method; or (ii) four (4) days after being mailed by certified
mail, return receipt requested, postage prepaid, or (iii) one (1) day
after being sent by Federal Express or other reputable overnight delivery
service providing delivery confirmation, for next day delivery, in each
case to the parties at the following address (or at such other address
for a party as shall be specified by like notice):
If to Borrower: Wilson Financial Corporation
7800 Belfort Parkway, Suite 100
Jacksonville, Florida 32256
Attention: J. Steven Wilson
Mr. J. Steven Wilson
7800 Belfort Parkway, Suite 100
Jacksonville, Florida 32256
<page 46>
With a copy to: Holland & Knight
One Independent Drive, Suite 2000
Post Office Box 1559
Jacksonville, Florida 32201-1559
(32202 for street address)
Attention: Malcolm Graham, Esq.
If to Lender, to: Imagine Investments, Inc.
8150 No. Central Expressway
Suite 1901
Dallas, Texas 75206
Attention: Gary Goltz, General Counsel
With a copy to: Michael M. Fleishman, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, Kentucky 40202
11. Miscellaneous.
11.1 Future Advances. This Stock Pledge Agreement also secures
all additional loans and/or future advances that may be made hereafter
at any time by Lender to Borrower.
11.2 Governing Law. The laws of the Commonwealth of Kentucky
shall govern the construction of this Stock Pledge Agreement and the
rights, remedies and duties of the parties hereunder.
11.3 Successors and Assigns. This Stock Pledge Agreement shall
bind Borrower and its successors and assigns, and shall inure to the
benefit of Lender and its successors and assigns.
11.4 Time of Essence. Time shall be of the essence in the
performance of Borrower's obligations hereunder.
11.5 Captions. The several captions, headings, sections and
subsections of this Stock Pledge Agreement are inserted for convenience
only and shall be ignored in interpreting the provisions of this Stock
Pledge Agreement.
11.6 Modifications. This Stock Pledge Agreement may be modified
or amended only by written agreement executed by all of the parties
hereto.
12. Termination. This Pledge Agreement shall terminate when the Note
and all the other Secured Obligations have been paid in full, at which
time Lender shall reassign and redeliver, without recourse upon or
warranty by Lender and at the expense of Borrower (or cause to be so
reassigned and redelivered to Borrower or to such person or persons as
Borrower shall designate), against receipt, such of the Stock (if any)
as shall not have been sold or otherwise applied by Lender pursuant to
the terms hereof and shall still be held by it hereunder, together with
appropriate instruments of reassignment and release.
<page 47>
In Witness Whereof, the parties have entered into this Stock Pledge
Agreement as of the date first written above.
Wilson Financial Corporation
_________________________________ By:______________________________
Witness Title:___________________________
("Wilson")
__________________________________ __________________________________
Witness J. Steven Wilson ("Steven")
("Collectively")
("Borrower")
Imagine Investments, Inc.
__________________________________ By:______________________________
Witness Title:___________________________
("Lender")
<page 48>
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into
as of February 25, 1999, by and among: (i) Wilson Financial Corporation, a
Florida corporation ("Wilson"), (ii) J. Steven Wilson, an individual of
Jacksonville, Florida ("Steven"), and (iii) Imagine Investments, Inc., a
Delaware corporation with principal office and place of business in
Dallas, Texas ("Imagine").
Recitals:
A. Wilson and Steven both own shares of common stock of Riverside
Group, Inc., a Florida corporation (the "Corporation").
B. Wilson and Steven are willing to grant to Imagine an option to
purchase 785,173 shares (the "Shares") of the common stock of the
Corporation, and Imagine desires to acquire such option from Wilson and
Steven, upon the terms and provisions set forth herein.
C. The parties hereto recognize and represent that at the time this
Agreement was negotiated, the common stock of the Corporation was
trading for less than $1.75 per share on the NASDAQ SmallCap Stock
Market.
Agreement:
Now, Therefore, the parties hereby agree as follows:
1. Option.
1.1 Grant of Option. In consideration of the payment by Imagine
to Wilson and Steven of the sum of $10,000, the receipt and sufficiency
of which they hereby acknowledge (the "Option Consideration"), Wilson and
Steven hereby jointly and severally grant to Imagine the exclusive right
and option to purchase the Shares (the "Option"). The purchase price for
each Share shall be $1.75 (the "Option Price"). The Option Consideration
shall not apply against the Option Price of the shares purchased by
Imagine hereunder.
1.2 Term. The term of the Option shall commence on the date
hereof and shall expire on December 31, 2001 (the "Term"). Provided,
however, that Imagine may unilaterally extend the Term until December 31,
2004, upon written notice to Wilson and Steven; provided, further,
however, if that certain Promissory Note in the face principal amount of
Six Million Dollars ($6,000,000) made by Wilson payable to the order of
Imagine, of even date herewith (the "Note"), has not been paid in full by
the date of such extension by Imagine, then Imagine must extend the
maturity date of the Promissory Note until December 31, 2004 (or such
earlier date as Imagine may select in its sole discretion for both the
Option and the maturity date of such Promissory Note), with interest on
such Note still being due and payable on a quarterly basis as provided
therein. If the Note has been paid prior to December 31, 2001, Imagine
<page 49>
may nevertheless extend the Option until December 31, 2004, and the
payment by Wilson of the Note prior to its extended maturity date shall
not affect the extended Term of the Option, which shall remain December
31, 2004 (or such earlier date selected by Imagine).
1.3 Adjustments. Notwithstanding any provision to the contrary
contained in this Agreement, if, and whenever, prior to the delivery of
Certificates representing all of the Shares by Wilson and Steven to
Imagine, the Corporation shall effect a subdivision or consolidation or
other capital readjustment with respect to its stock, by stock split,
stock combination or otherwise, or the Corporation shall issue any
additional shares by way of a stock dividend, or the Corporation shall
otherwise effect or become obligated to effect any other increase in the
number of shares outstanding without receiving the full fair market value
therefor in money, services or other property or shall effect a reduction
in the number of shares outstanding without the payment of money or other
property for the repurchase or redemption thereof, then the number of
shares remaining subject to the Option and the Purchase Price therefor
shall be proportionately adjusted, immediately following each such
action, as follows:
(a) In the event of an increase in the number of outstanding
shares as a result of any such action, the number of Shares remaining
subject to the Option shall be proportionately increased, and the Option
Price shall be proportionately reduced, so that, upon exercise of the
Option, Imagine shall be entitled to receive the aggregate number of
Shares which it would have been entitled to receive upon exercise of such
Option had Imagine exercised such Option immediately prior to such event
or, if earlier, immediately prior to the record date for determining
shareholders entitled to participate in such event (if the Corporation
has issued additional Shares or has become obligated to issue additional
Shares for some consideration but for less that the full fair market
value thereof, the adjustment in the number of Shares subject to the
Option and the Option Price per Share shall be made on an equitable pro
rata basis to the complete satisfaction of Imagine),
(b) In the event of a reduction in the number of outstanding
shares of the Corporation as a result of any such action, the number of
Shares remaining subject to the Option shall be proportionately reduced,
and the Option Price per Share shall be proportionately increased,
in each case in accordance with the change in the number of shares
outstanding as a result of such action(s) described in this Section,
(c) Simultaneously with any adjustment of the total number of
Shares purchased upon exercise of the Option, in accordance with Section
1.3(a) or (b) above, the Purchase Price per Share shall be adjusted to
equal the quotient resulting by dividing the number of Shares (including
fractional share interests) covered by this Option immediately after such
adjustment into the Option Price that would have been paid upon the
exercise of the Option as to all of the Shares then remaining subject to
<page 50>
the Option. The adjustments provided for in this Section 1.3(c) shall
become effective immediately after the opening of business on the day
next following (i) the record date of such dividends, (ii) the date upon
such subdivision, combination or reclassification shall become effective,
or (iii) the record date for any similar action contemplated by this
Section 1.3.
1.4 Manner of Exercise.
(a) Imagine may exercise the Option as to any or all of the
Shares at any time on or prior to the expiration of the Term by delivery
of written notice of such exercise ("Notice") to Wilson and Steven. The
Notice shall specify the number of Shares to be purchased pursuant to
exercise of the Option, and shall be accompanied by a certified or
cashier's check payable to Wilson and Steven or wire of immediately
available funds in an amount equal to (i) the Option Price, multiplied
by (ii) the total number of Shares then being purchased by Imagine
pursuant to exercise of the Option; provided, however, if the Note has
not then been paid in full, then the Option Price for all the Shares
purchased upon such exercise shall instead be applied against the Note.
(b) Upon exercise of the Option by Imagine and simultaneously
with delivery by Imagine of the applicable Option Price to Wilson and
Steven, Wilson and Steven shall deliver to Imagine the certificate(s),
accompanied by duly executed stock powers, evidencing the Shares being
purchased pursuant to such exercise of the Option, free and clear of all
liens, claims, options, pledges, security interests and the like and free
of all restriction; provided, however, that if any amount is owed under
the Note, or the instruments securing the Note, the entire amount of the
applicable Option Price shall be applied directly by Imagine on the Note
or such other indebtedness owed to Imagine (except to the extent of $1.35
per Share if necessary to be paid to Bank Boston, N.A. ("Bank Boston") to
have such Shares released from its lien) but, nevertheless, the entire
amount of such Option Price shall be deemed to have been paid to Wilson
and Steven, and thereupon, Imagine shall release such Shares so purchased
by Imagine from its lien that secures the Note.
2. Legend on Share Certificates. The following legend shall be placed
upon each Certificate representing the Shares (other than those still
pledged to Bank Boston) until such time as such Shares are placed in the
name of Imagine:
A Stock Option Agreement dated as of February 25, 1999
among Wilson Financial Corporation and J. Steven Wilson,
shareholders of the Corporation, and Imagine Investments,
Inc. ("Imagine"), has been delivered to the Secretary of
the Corporation to be kept on file at the Corporation's
registered office. That Agreement imposes various
restrictions upon the shares represented by this
Certificate and subjects such shares to an exclusive
option in favor of Imagine to purchase such shares and
certain other rights and interests with respect to these
shares.
<page 51>
3. Further Assurances. Each party shall execute such additional
documents and take such other actions as the other party shall reasonably
request to consummate the transactions contemplated hereby and otherwise
as may be necessary to effectively carry out the terms and provisions of
this Agreement.
4. Representations, Warranties and Covenant of Wilson and Steven.
4.1 Representations and Warranties. Wilson and Steven hereby
represent and warrant to Imagine that (i) Wilson and Steven are the sole
legal and beneficial owners of the Shares, and that the Shares are free
and clear of all liens, claims, encumbrances, charges and restrictions
of any nature whatsoever except for prior liens in favor of Bank Boston,
N.A. and Imagine; (ii) Wilson and Steven have the sole right and
authority to enter into and perform this Agreement and transfer title to
the Shares to Imagine; and (iii) the execution and delivery of this
Agreement and the sale of the Shares to Imagine pursuant to the
provisions hereof will not breach or constitute default under any
contract or agreement to which either Wilson or Steven is a party. Such
representations and warranties of Wilson and Steven shall survive the
execution of this Agreement.
4.2 Covenant. During the Term, Wilson and Steven shall not sell,
convey, further pledge or encumber, or otherwise transfer any Shares,
except pursuant to the laws of descent and distribution upon the death
of Steven; provided that, in the event of the death of Steven, the Shares
shall remain subject to the terms of this Agreement.
5. Indemnification. Wilson and Steven shall indemnify and hold
Imagine harmless against and in respect of:
(a) Any damage, deficiency, liability or costs resulting from
any misrepresentation, breach of warranty or nonfulfillment of any
covenant or agreement on the part of Wilson or Steven under this
Agreement; and
(b) Any claim, action, suit, proceeding, demand, judgment,
assessment, cost and expense, including reasonable counsel fees,
resulting from any misrepresentation, breach of warranty or non-fulfillment
of any covenant or agreement on the part of Wilson or Steven under this
Agreement.
6. Additional Agreements Regarding Shares. Wilson and Steven
hereby assign to Imagine all of the respective rights, titles and interests
of Wilson and Steven under any and all registration rights and similar
agreements with respect to the Shares of the Corporation, to the extent
Imagine has from time to time acquired or thereafter does acquire any of the
Shares.
<page 52>
In addition, in the event Imagine has from time to time purchased or
acquired any of the Shares of the Corporation pursuant to the Option or
otherwise, and if Wilson and/or Steven shall, at any time and from time
to time through December 31, 2009, agree to sell any of the stock of the
Corporation owned by either of them, or to otherwise transfer any of such
stock, either directly or indirectly, Wilson and/or Steven, and or either
or both of them that are selling or transferring such Shares, shall:
(i) Give written notice to Imagine by certified or
registered mail (return receipt requested) or by hand delivery (with
a return receipt) as promptly as practicable (but in no event less
than fifteen (15) days prior to such sale or transfer) of all the
details, price and terms of such sale or transfer and the identity of
the party (the "Buyer") to whom such stock is to be sold or
transferred; and
(ii) Require as a condition of such sale or transfer
that the Buyer include in such sale or transfer the number of Shares
owned by Imagine (but not greater than (a) the product determined by
multiplying the number of shares of stock of the Corporation involved
in such sale by a fraction, the numerator of which is the number of
Shares subject to this Option plus the number of shares of stock of
the Corporation owned by Imagine and the denominator of which is the
number of shares of stock constituting the numerator of such fraction
plus the number of shares of stock of the Corporation owned by Wilson
and Steven at the time of such calculation (b) plus the number of
shares of stock of the Corporation that Imagine is entitled to sell
under the Loan Agreement of even date herewith pursuant to which the
Note has been issued) that are specified by Imagine in a written
notice to be given by Imagine to Wilson or Steven, as applicable,
within ten (10) days after Imagine's receipt of the notice provided
for in subparagraph (i) above, all on the same terms and conditions
and at the same price per share of stock as Wilson and/or Steven are
selling such shares of stock of the Corporation; and
(iii) Imagine shall bear its own legal expenses in
connection with participating in such sale or transfer, but Wilson and
Steven shall pay all other expenses of Lender in connection with such
sale or transfer.
7. Proxy. Wilson and Steven hereby appoint Imagine as Wilson and
Steven's true and lawful proxy and attorney-in-fact to vote the Shares
on any manner as to which holders of common stock of the Corporation are
otherwise entitled to vote, but only as to the Shares as to which Imagine
has exercised the Option. The proxy granted by Wilson and Steven herein
is coupled with an interest and shall be irrevocable with respect to any
Shares unexercised.
8. Miscellaneous.
8.1 Waiver. The failure of any party to enforce any provision of
this Agreement cannot be construed to be a waiver of such provision or
of the right hereafter to enforce the same, and no waiver of any breach
shall be construed as an agreement to waive any subsequent breach of the
same or any other provision.
<page 53>
8.2 Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter
hereof, and no prior or collateral promises or conditions in connection
with or with respect to the subject matter hereof not incorporated herein
shall be binding upon the parties hereto.
8.3 Amendment. No modification, extension, renewal, rescission,
termination or waiver of any of the provisions contained herein or any
future representation, promise or condition in connection with the
subject matter hereof shall be binding upon either of the parties unless
made in writing and duly executed by the parties or their authorized
representatives.
8.4 Successors. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors,
assigns, heirs and legal and personal representatives. Imagine may
assign its rights under this Agreement, in whole or in part, and from
time to time, without the need for consent from Wilson or Steven.
8.5 Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
8.6 Captions. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this document.
8.7 Governing Law. This Agreement is executed and delivered in,
and shall be construed and enforced in accordance with the laws of, the
Commonwealth of Kentucky.
In Witness Whereof, the parties have entered into this Agreement as of
the date first written above.
Wilson Financial Corporation
_____________________________
By:
Title:
("Wilson")
______________________________
J. Steven Wilson
("Steven")
Imagine Investments, Inc.
______________________________
By:
Title:
("Imagine")
<page 54>
STOCK PLEDGE AGREEMENT
This Stock Pledge Agreement is entered into and effective as of
February 25, 1999, by and among: (i) J. Steven Wilson, an individual of
Jacksonville, Florida ("Guarantor"), (ii) Wilson Financial Corporation, a
Florida corporation having its principal office in Jacksonville, Florida
("Borrower"), and (iii) Imagine Investments, Inc., a Delaware corporation
having its principal office in Dallas, Texas ("Lender")
Recitals:
A. Pursuant to the terms of that certain Loan Agreement of even date
herewith among Borrower, Lender and Guarantor (the "Loan Agreement"), and
that certain Term Promissory Note of even date herewith, executed by
Borrower in favor of Lender in the face principal amount of Six Million
Dollars ($6,000,000.00) (the "Note"), as the same may hereafter be amended
or otherwise modified from time to time in writing by the parties
thereto, Lender has agreed to extend a term loan to Borrower in the
amount of Six Million Dollars ($6,000,000) (the "Term Loan").
B. Guarantor has personally guaranteed the obligations of Borrower
to Lender pursuant to the Note, the Term Loan and the In-Kind Note as
defined in Section 12 of the Loan Agreement.
C. Guarantor currently owns 100% of the issued and outstanding
preferred capital stock of Borrower and 59.8% of the issued and
outstanding common capital stock of Borrower.
D. In order to induce Lender to make the Term Loan, without which
inducement Lender would be unwilling to do so, Guarantor has agreed to
pledge all of the shares of the issued and outstanding common and
preferred capital stock of Borrower owned by Guarantor to Lender, to
secure the payment of the Term Loan and the other obligations of Borrower
to Lender, including, without limitation, the In-Kind Note.
Agreement:
Now, Therefore, the parties hereby agree as follows:
1. Pledge and Deposit of Shares. Guarantor hereby pledges, assigns
and grants a security interest to Lender in 598 shares of the common stock
of Borrower and 336 shares of the preferred stock of Borrower
(collectively, the "Stock"), as represented by Certificate Nos. 2 and 20
with respect to the common stock and Certificate Nos. 2 and 3 with
respect to the preferred stock, now standing in Guarantor's name and
constituting 59.8% of the issued and outstanding common capital stock of
Borrower and 100% of the issued and outstanding preferred capital stock
of Borrower, all as collateral security for the full and punctual payment
and due performance by Borrower and Guarantor of (i) the Note and
Guarantor's guaranty of the Note, and (ii) all other liabilities,
<page 55>
obligations and indebtedness of whatever kind of Borrower and Guarantor
to Lender, whether created directly or acquired by Lender by assignment
or otherwise, whether now existing or hereafter created, arising or
acquired, absolute or contingent, joint or several, due or to become due,
and including, but not limited to, future advances by Lender to Borrower
and Guarantor. All of the foregoing are referred to collectively herein
as the "Secured Obligations."
2. Further Pledge and Deliveries. The certificates or other
instruments evidencing all new shares of capital stock and all other securities,
rights, warrants, options and the like hereafter created in respect of
the Stock, whether by stock split, stock dividend, merger, consolidation
or otherwise, shall be delivered by Guarantor to, and shall be held by,
Lender under the terms and conditions of this Stock Pledge Agreement and
subject to the pledge and security interest herein granted and the term
"Stock," as used herein, shall be deemed to include all such new shares,
securities, rights, warrants, options and the like. At its sole option,
Lender may transfer the shares of Stock into its own name.
3. Covenants. During the period the Stock is being held as security
hereunder, Guarantor shall not, without the prior written consent of
Lender, allow Borrower to (i) issue any additional capital stock or other
equity securities of any kind or options, subscription rights, warrants
or other instruments with respect thereto or any other instruments
convertible into shares of its capital stock, or sell or issue any
treasury stock, (ii) merge into or with or consolidate with any other
corporation or business or otherwise participate in any reorganization
or sell or lease to others all or substantially all of its assets, (iii)
amend its Articles of Incorporation or By-Laws in any manner that would
have a material adverse effect on Lender's rights with respect to the
Stock, or liquidate or dissolve or take any steps to effect same, or (iv)
effect a recapitalization or alter its capital structure.
4. Voting Rights; Dividends, Etc. So long as no Event of Default
shall have occurred, Guarantor shall be entitled to exercise any and all
voting and/or consensual rights and powers relating or pertaining to the
Stock or any part thereof for any purpose not inconsistent with the terms
of this Stock Pledge Agreement. All dividends and distributions,
regardless whether in cash, stock, rights, options or other property, and
all stock splits, stock dividends and the like and the proceeds of all
redemptions and liquidations that are made, paid or declared with respect
to the Stock shall be paid directly to Lender, and shall, at Lender's
sole election, either be applied as a payment on the Secured Obligations
or held by Lender as additional security for the Secured Obligations (and
Borrower shall execute all instruments in connection therewith as are
requested by Lender).
5. Status of the Stock. Guarantor hereby represents and warrants to
Lender that (a) the Stock is validly issued and outstanding, fully paid
and non-assessable; and (b) Guarantor is the registered and absolute
beneficial owner of 59.8% of the issued and outstanding common capital
stock of Borrower and 100% of the issued and outstanding preferred
capital stock of Borrower; (c) the Stock is free and clear of liens,
<page 56>
charges and encumbrances in favor of persons other than Lender;
(d) Guarantor has the full power and authority to pledge the Stock to
Lender pursuant to this Stock Pledge Agreement; and (e) Borrower is a
corporation validly existing under the laws of the State of Florida. No
part of the Stock shall be sold, transferred or further assigned by
Guarantor without the prior written consent of Lender, which consent may
be arbitrarily withheld so long as this Stock Pledge Agreement is in
effect.
6. Maintenance of Priority of Pledge. Guarantor shall be liable for
and shall from time to time pay and discharge all taxes, assessments and
governmental charges imposed upon the Stock by any federal, state or
local authority, the liens of which would or might be held prior to the
right of Lender in and to the Stock or which are imposed on the holders
and/or registered owners of the Stock. Guarantor shall not, at any time
while this Stock Pledge Agreement is in effect, do or suffer any act or
thing whereby the rights of Lender in the Stock would or might be
materially impaired or diminished. Guarantor shall execute and deliver
such further documents and take such further actions as may be required
to confirm the rights of Lender in and to the Stock or otherwise to
effectuate the intention of this Stock Pledge Agreement.
7. Events of Default. Each of the following shall be deemed an "Event
of Default" hereunder:
7.1 Cross Default. The occurrence of any Event of Default under
the Note or any "Security Document," as such term is defined in the Note,
or under any other related instrument or agreement; or
7.2 Default Hereunder. The occurrence of any default of any kind
whatsoever under the terms, covenants and conditions of this Stock Pledge
Agreement; or
7.3 Breach of Covenants. If any covenant, representation or
warranty made in this Stock Pledge Agreement or in any other Security
Document or related instruments or agreements executed by Guarantor or
Borrower in connection with the Term Loan shall prove to be untrue and
misleading in any respect; or
8. Remedies Upon Default. Upon the occurrence of any Event of Default
referred to in Section 7 above, Lender shall have all rights and remedies
in and against the Stock and otherwise of a secured party under the
Uniform Commercial Code as enacted in the Commonwealth of Kentucky and
the State of Florida (the "UCC") and all other applicable laws, and shall
also have all of the rights provided herein, in the Note and in all other
Security Documents, all of which rights and remedies shall be cumulative
to the fullest extent permitted by law. In connection with the
foregoing, Lender shall have the right:
8.1 Voting Rights. To exercise all voting rights and privileges
whatsoever with respect to the Stock, and to that end Guarantor hereby
constitutes Lender as his proxy and attorney-in-fact for all purposes of
voting the Stock, and this appointment shall be deemed coupled with an
<page 57>
interest and is and shall be irrevocable until the Secured Obligations
have been fully paid and this Stock Pledge Agreement terminated, and all
persons whatsoever shall be conclusively entitled to rely upon Lender's
verbal or written certification that it is entitled to vote the Stock
hereunder. Guarantor shall execute and deliver to Lender any and all
additional proxies and powers of attorney that Lender may desire in order
to vote more effectively the Stock in its own name. Upon any Event of
Default hereunder, Lender may vote the Stock to remove the directors and
officers of Borrower and to elect new such officers and directors who
shall thereafter manage the affairs of Borrower, operate any of its
properties, carry on any business, and otherwise take any action with
respect thereto as they shall deem necessary and appropriate, and may
also liquidate Borrower and its business, and may authorize the borrowing
of money in the name of Borrower and the pledge of its assets to secure
such borrowing.
8.2 Right of Sale. To declare the Note and the other Secured
Obligations immediately due and payable in full, and to sell the Stock
in one or more lots, and from time to time, upon ten (10) business days'
prior to written notice to Guarantor of the time and place of sale (which
notice Guarantor hereby conclusively agrees is commercially reasonable),
for cash or upon credit or for future delivery, Guarantor hereby waiving
all rights, if any, of marshaling the Stock and any other security for
the payment of the Note and other Secured Obligations, and at the option
and in the sole discretion of Lender, to either:
(i) Sell the Stock at a public sale or sales, including
a sale at or on any broker's board or stock exchange; or
(ii) Sell the Stock at a private sale or sales.
Lender may bid for and acquire the Stock or any portion thereof at any
public sale, free from any redemption rights of Guarantor, and in lieu
of paying cash therefor, may make settlement for the selling price of the
Stock or any part thereof by crediting the net selling price of the Stock
against the Note and other Secured Obligations, after deducting all of
Lender's costs and expenses of every kind and nature therefrom, including
Lender's attorneys' fees incurred in connection with realizing upon the
Stock and enforcing the Security Documents and the Note, provided the
same is not prohibited by the laws of the Commonwealth of Kentucky.
From time to time Lender may, but shall not be obligated to, postpone
the time of any proposed sale of any of the Stock which has been the
subject of a notice as provided above, and also, upon ten (10) days'
prior written notice to Guarantor (which notice Guarantor conclusively
agrees is commercially reasonable), may change the time and/or place of
such sale.
In the case of any sale by Lender of the Stock or any portion thereof
on credit or for future delivery, which may be elected at the option and
in the sole discretion of Lender, the Stock so sold may, at the sole
option of Lender, either be delivered to the purchaser or retained by
Lender until the selling price is paid by the purchaser, but in either
<page 58>
event Lender shall incur no liability, to Guarantor or otherwise, in case
of failure of the purchaser to take up and pay for the Stock so sold.
In case of any such failure, such Stock may be sold again by Lender in
the manner provided in this Section 8.
Guarantor covenants and agrees that, during any period of sale or
liquidation of the Stock by Lender, Guarantor shall not sell any other
stock of Borrower if such sale would restrict or limit Lender's sale of
the Stock under Rule 144 or other Rule of the Securities and Exchange
Commission or if such sale by Guarantor would cause or contribute to a
decline in the share price of the Stock. Guarantor further agrees in the
event of any such sale or liquidation by Lender, to execute any and all
forms, including, but not limited to, Forms 144 and customary broker's
and seller's representation letters, to enable Lender to effect the sale
of the Stock. Guarantor shall further take and shall cause Borrower to
take all necessary actions to remove any restrictive legend affecting the
Stock, and to assist in the effectuation of the sale of the Stock
including, at Guarantor's expense, the supplying of opinions of counsel
customarily required to effect such sales.
8.3 Costs and Expenses. After deducting all of Lender's costs and
expenses of every kind, including, but not limited to, legal fees and
registration (Securities and Exchange Commission and other) fees and
expenses, if any, incurred in connection with the sale of the Stock,
Lender shall apply the residue of the proceeds of any sale or sales of
the Stock against the Note and the other Secured Obligations, in the
order of priority elected by Lender. Lender shall not incur any
liability to Guarantor or otherwise as a result of the sale of the Stock
at any private sale or sales, and Guarantor hereby waives any claim
arising by reason of (i) the fact that the price or prices for which the
Stock or any portion thereof is sold at such private sale or sales is
less than the price which would have been obtained at a public sale or
sales or is less than the amount due under the Note and other obligations
secured hereby, even if Lender accepts the first offer received and does
not offer the Stock or any portion thereof to more than one offeree, (ii)
any delay by Lender in selling the Stock following an Event of Default
hereunder, even if the price of the Stock thereafter declines, or (iii)
the immediate sale of the Stock upon the occurrence of an Event of
Default hereunder, even if the price of the Stock should thereafter
increase. Guarantor shall remain liable for any deficiency remaining due
under the Note, this Stock Pledge Agreement, any of the other Security
Documents or any related documents or instruments.
9. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given (i) upon being
delivered personally (or by confirmed telefax or other electronic
delivery method; or (ii) four (4) days after being mailed by certified
mail, return receipt requested, postage prepaid, or (iii) one (1) day
after being sent by Federal Express or other reputable overnight delivery
service providing delivery confirmation, for next day delivery, in each
case to the parties at the following address (or at such other address
for a party as shall be specified by like notice):
<page 59>
If to Guarantor: J. Steven Wilson
Wilson Financial Corporation
7800 Belfort Parkway, Suite 100
Jacksonville, Florida 32256
With a copy to: Holland & Knight
One Independent Drive, Suite 2000
Post Office Box 1559
Jacksonville, Florida 32201-1559
(32202 for street address)
Attention: Malcolm Graham, Esq.
If to Borrower: Wilson Financial Corporation
7800 Belfort Parkway, Suite 100
Jacksonville, Florida 32256
Attention: J. Steven Wilson
With a copy to: Holland & Knight
One Independent Drive, Suite 2000
Post Office Box 1559
Jacksonville, Florida 32201-1559
(32202 for street address)
Attention: Malcolm Graham, Esq.
If to Lender, to: Imagine Investments, Inc.
8150 No. Central Expressway
Suite 1901
Dallas, Texas 75206
Attention: Gary Goltz, General Counsel
With a copy to: Michael M. Fleishman, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, Kentucky 40202
10. Miscellaneous.
10.1 Future Advances. This Stock Pledge Agreement also secures
all additional loans and/or future advances that may be made hereafter
at any time by Lender to Borrower and/or Guarantor.
10.2 Governing Law. The laws of the Commonwealth of Kentucky
shall govern the construction of this Stock Pledge Agreement and the
rights, remedies and duties of the parties hereunder.
10.3 Successors and Assigns. This Stock Pledge Agreement shall
bind Guarantor and his successors and assigns, and shall inure to the
benefit of Lender and its successors and assigns.
10.4 Time of Essence. Time shall be of the essence in the
performance of Guarantor's obligations hereunder.
10.5 Captions. The several captions, headings, sections and
subsections of this Stock Pledge Agreement are inserted for convenience
only and shall be ignored in interpreting the provisions of this Stock
Pledge Agreement.
<page 60>
10.6 Modifications. This Stock Pledge Agreement may be modified
or amended only by written agreement executed by all of the parties
hereto.
11. Termination. This Stock Pledge Agreement shall terminate when the
Note and all the other Secured Obligations have been paid in full, at
which time Lender shall reassign and redeliver, without recourse upon or
warranty by Lender and at the expense of Guarantor (or cause to be so
reassigned and redelivered to Guarantor or to such person or persons as
Guarantor shall designate), against receipt, such of the Stock (if any)
as shall not have been sold or otherwise applied by Lender pursuant to
the terms hereof and shall still be held by it hereunder, together with
appropriate instruments of reassignment and release.
In Witness Whereof, the parties have entered into this Stock Pledge
Agreement as of the date first written above.
________________________________ ______________________________
Witness J. Steven Wilson
("Guarantor")
Wilson Financial Corporation
_____________________________ By:____________________________
Witness Title:_________________________
("Borrower")
Imagine Investments, Inc.
______________________________ By:_____________________________
Witness Title:__________________________
("Lender")
<page 61>
Bank Boston, N.A.
February 25, 1999
Imagine Investments, Inc.
8150 North Central Expressway, Suite 1901
Dallas, Texas 75206
Attn: Gary Goltz, General Counsel
Wilson Financial Corporation
7800 Belfort Parkway
Jacksonville, Florida 32256
Attn: J. Steven Wilson, President
Re: Release of Collateral for Loan from Bank Boston, N.A. to
Wilson Financial Corporation
Gentlemen:
The purpose of this letter is to confirm the understanding and
agreement of Bank Boston, N.A. (the "Bank"), concerning (i) the release
of certain stock pledged as collateral for payment of the indebtedness
owed by Wilson Financial Corporation, a Florida corporation (the
"Borrower") to the Bank, and (ii) the grant by the Borrower to Imagine
Investments, Inc., a Delaware corporation ("Imagine"), of a second lien
on, and security interest in, the "Stock," as hereinafter defined.
As of the date hereof, the Bank represents to Imagine that the
Borrower has pledged a total of 2,224,961 shares of stock (the "Stock")
of Riverside Group, Inc., a Florida corporation, owned by the
Borrower, to the Bank, as collateral for payment of the indebtedness
owed by the Borrower to the Bank (the "Bank Boston Indebtedness"), the
current outstanding principal balance of which is $3,000,000 as of the
date hereof. The Bank agrees not to increase the outstanding
principal balance of the Bank Boston Indebtedness and not to make any
other loan to Borrower or to J. Steven Wilson ("Steven") and not to
accept any guaranty from either of them that would be secured by a
pledge of or lien on the Stock.
The Borrower has advised the Bank that it intends to obtain a loan
from Imagine in the amount of $6,000,000 (the "Imagine Loan"), which
loan will enable the Borrower to make its regularly scheduled payments
of principal and interest on the Bank Boston Indebtedness, as well as
to pay other obligations of the Borrower. The Borrower and Imagine
have further advised the Bank that Imagine is not willing to make the
Imagine Loan unless Imagine obtains a lien on and security interest in
all of the Stock and other stock owned by the Borrower, and unless the
Bank agrees to the pledge by the Borrower of all the stock of the
Corporation owned by Borrower (of which the Stock is a part) and
agrees to release portions of the Stock on a pro-rata basis, as
principal reductions in the Bank Boston Indebtedness are made by the
Borrower.
<page 62>
The Bank hereby irrevocably consents to (i) the grant by Borrower
and Steven of an option in favor of Imagine for Imagine to purchase
785,173 shares of the Stock (and/or other shares of stock of the
Corporation) and (ii) also the exercise of such option by Imagine, so
long as $1,430,977.70 (785,173 shares x $1.35) of the purchase
proceeds are applied to the Bank Boston Indebtedness, if it has not
already then been paid off, at which time the Bank shall release its
lien on the subject shares.
The Bank hereby irrevocably consents to the making of the Imagine
Loan to Borrower and the grant by the Borrower in favor of Imagine of
a lien on, and security interest in, all of the Stock to secure the
Imagine Loan (it being agreed and understood, that such lien on and
security interest in the Stock in favor of Imagine shall be junior to
the lien of the Bank on the Stock until such Stock is released by the
Bank). The Bank further irrevocably agrees that upon its receipt of
any payment of the principal of the Bank Boston Indebtedness (from
whatever source), the Bank shall release portions of the Stock from
the lien and security interest of the Bank thereon, based on the
release of one (1) share of the Stock for each $1.35 of payment of
principal of the Bank Boston Indebtedness; however, upon the final
payment of principal of the Bank Boston Indebtedness, the Bank shall
only release the remaining shares of Stock that it holds, upon the
payment of the principal balance, plus accrued interest and the Bank's
out of pocket costs.
The Bank irrevocably agrees that upon its release of portions of
the Stock from time to time as contemplated above, the Bank will
obtain and deliver directly to Imagine at its address listed above, or
to such other address as Imagine may notify the Bank in writing from
time to time hereafter, original certificates representing such
released shares of the Stock. Borrower and Imagine recognize that at
the time the Bank is to release shares of the Stock to Imagine, the
Bank may not be in possession of original certificates representing
the exact number of shares to be released. If that is the case, the
Bank agrees to promptly send to the transfer agent one or more
certificates, representing shares aggregating not less than the number
the Bank is to release to Imagine, and request that the certificates
be divided into two or more certificates, one of which will be for the
number of shares the Bank is to release to Imagine. The Bank will
request of the transfer agent that it send the released shares
directly to Imagine; however, if the transfer agent sends the
certificate for the released shares back to the Bank, the Bank will
immediately upon receipt forward the same to Imagine. At the time the
Bank sends shares to Imagine or to the transfer agent, the Bank will,
under separate cover, send Imagine an executed blank stock power, if
after doing so, the Bank will still have adequate powers for its own
needs.
Notwithstanding anything herein to the contrary, the Bank shall at
all times, prior to the termination of the Agreement for Additional
Compensation between the Bank and the Borrower, dated November 30,
1994, a copy of which is attached hereto as Exhibit A and incorporated
<page 63>
herein for reference (the "Agreement"), hold at least 150,000 shares of
the Stock, adjusted for dilution as provided in the Agreement (the
"Base Shares"). Despite the Bank's option to purchase all or any
portion of the Base Shares, as set forth in the Agreement, Imagine
shall retain its lien in the Base Shares. If the Bank exercises its
option to purchase the Base Stock, Imagine's lien thereon shall
terminate and the Bank shall forward such portion of the purchase
proceeds, if any, as would otherwise go to the Borrower, to Imagine.
Notwithstanding anything herein to the contrary, in the event of a
default of the Bank Boston Indebtedness, the Bank may exercise all
remedies available to it under the various instruments and agreements
evidencing and governing the Bank Boston Indebtedness, provided, the
Bank first gives five (5) business days notice (the "Notice") to
Imagine and Borrower of its intent to exercise such remedies. The
Bank shall give Notice in writing and have it (1) personally delivered
against a written receipt, (2) sent by confirmed telephonic facsimile,
or (3) delivered to a reputable express messenger service (such as
Federal Express, DHL Courier and United Parcel Service) for overnight
delivery, addressed as follows:
To Borrower: Wilson Financial Corporation
7800 Belfort Parkway
Jacksonville, FL 32256
Attn: J. Steven Wilson
Telephone: (904) 281-2200
Fax: (904) 296-0584
To Imagine: Imagine Investments, Inc.
8150 North Central Expressway
Suite 1901
Dallas, Texas 75206
Attn: Gary Goltz, General Counsel
Telephone: (214) 365-1905
Fax: (214) 365-6905
cc: Michael M. Fleishman, Esq.
Greenebaum Doll & McDonald PLLC
3300 National City Tower
Louisville, Kentucky 40202
Telephone: (502) 587-3530
Fax: (502) 540-2131
With respect to any payments received by the Bank during the five
(5) business day Notice period, the release provision set forth above
shall remain in full force and effect, and therefore, subject to our
rights to retain shares for purposes of the Agreement, with respect of
<page 64>
any payment received by the Bank during that period, the Bank shall
release one (1) share of the Stock for each $1.35 of payment of
principal that the Bank Boston Indebtedness received. Without
including any amounts due as a result of the acceleration of the Bank
Boston Indebtedness, if the payment referenced in this paragraph is
sufficient to cure the default of the Bank Boston Indebtedness, the
default shall be deemed cured. If the Bank Boston Indebtedness was
accelerated, it shall be restored to the same position as if there had
been no acceleration.
If the Borrower defaults on the Bank Boston Indebtedness, the Bank
hereby grants Imagine the right to purchase, in its entirety, but not
in part, the Bank Boston Indebtedness at par plus accrued interest and
the Bank's out of pocket costs, in which event, all of the loan
documents, notes, collateral (including, but not limited to the Stock
and associated stock powers) and other instruments or documents
evidencing or securing the indebtedness then held by the Bank will be
assigned to Imagine without recourse and without representations and
warranties of any kind, except as to the amounts, including accrued
interest, due and payable to the Bank. Following such assignment, all
documents assigned shall be promptly delivered to Imagine. The
original certificates of stock shall be accompanied by whatever stock
powers Bank Boston now holds.
Further, the Bank agrees that it is holding all of the Stock as
agent for Imagine to perfect Imagine's lien on and security interest
in the Stock, and that it will not increase the amount of the Bank
Boston Indebtedness. The Bank has no affirmative duties as agent
other than the duty to hold the Stock for Imagine and to perform its
other obligations set forth in this letter agreement. The Bank shall
not be held liable to Imagine or Borrower, their successors and/or
assigns, for actions taken in its capacity as agent which result in
damages, losses or expenses relating to the Stock, unless the same
shall be caused by the gross negligence or willful misconduct of the
Bank.
The Bank agrees that all of its agreements under this letter are
and shall be irrevocable, even if the Bank Boston Indebtedness is in
default and even if the Borrower becomes insolvent and/or is involved
as the debtor in a bankruptcy proceeding. Notwithstanding the
foregoing, with respect to any shares of the Stock that the Bank is
entitled to retain following the five (5) business day Notice period,
the Bank shall have the absolute right, to exercise all remedies
provided for in, and to sell such shares in accordance with, the
governing loan documents. The sale of the shares shall be free and
clear of Imagine's interests in the Stock, except that Imagine shall
be entitled to receive net proceeds from the sale, if any, after
payment of the Bank Boston Indebtedness at par, accrued interest
thereon and the Bank's out of pocket costs. Imagine is not hereby
waiving the Bank's duty and obligation to sell the Stock in a
commercially reasonable manner.
<page 65>
Imagine agrees that if the Borrower defaults on the loan made by
Imagine to Borrower, Imagine shall not foreclose on its second lien
without first paying off the Bank Boston Indebtedness.
The Bank acknowledges that Imagine is relying upon this letter in
agreeing to make the Imagine Loan, without which it would not agree to
make the Imagine Loan. Borrower and Imagine acknowledge that the Bank
is relying upon this letter in consenting to a second lien being
placed on, and a security interest in, the Stock, without which it
would not agree to such additional encumbrances.
Sincerely,
BANK BOSTON, N.A.
By: _________________________________
Title: _________________________________
Agreed to:
Wilson Financial Corporation
By: ________________________
Title:________________________
Date: February 25, 1999
Agreed to:
Imagine Investments, Inc.
By: ________________________
Title: ________________________
Date: February 25, 1999
LOU-210460-5
<page 66>
UNCONDITIONAL GUARANTY AGREEMENT
In consideration of the loan evidenced by the Term Promissory Note
made by Wilson Financial Corporation ("Maker") in favor of Imagine
Investments, Inc. ("Payee") dated February 25, 1999, in the original
principal sum of $6,000,000.00 (the "Note"), the undersigned
unconditionally guarantees the prompt payment of (i) the entire principal
balance of the Note, (ii) all accrued interest upon the principal balance
hereof, (iii) late fees and (iv) all attorneys' fees and costs and
expenses of collection incurred by Payee, together with the costs and
expenses of maintaining and securing collateral pursuant to all documents
and instruments securing repayment of this Note, when due, whether by
acceleration or otherwise regardless of the genuineness, validity or
enforceability of this Note. The undersigned consents and agrees to be
bound by all of the terms of this Note (as the same may be extended or
renewed). The undersigned waives all rights and subrogation with respect
to this Note or any collateral securing its payment and all rights of
recourse or indemnity until this Note and all other obligations of Maker
to Payee shall have been fully paid. If any payment made by Maker to
Payee later deemed to be a preference or otherwise required to be repaid
or returned, the amount of such return or repayment shall continue to be
covered by this Guaranty. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT THE UNDERSIGNED MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH THE LOAN EVIDENCED BY THIS NOTE OR ANY
RELATED LOAN OR LENDING TRANSACTION OR ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION THEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR PAYEE MAKING THE LOAN
EVIDENCED BY THIS NOTE. THE UNDERSIGNED AGREES THAT THIS GUARANTY SHALL
BE AND IS DEEMED TO BE INCORPORATED INTO AND MADE A PART OF THIS NOTE AS
THOUGH A PART THEREOF.
The liability of the undersigned shall in no way be affected by any
renewal or extension of time of payment of the Note and any other
instrument, indebtedness or liability, or by any release or surrender of
other security or collateral or guaranty for the Note, or by delay in
enforcement of payment of the principal or interest or of any security
in connection therewith, or by any other indulgence Payee may grant
Maker.
The undersigned hereby declares to and covenants with Payee, its
successors or assigns, that the undersigned has no defense whatever to
any action, suit or other proceedings, at law or otherwise, that may be
instituted under or on account of this Guaranty, including all questions
as to the validity, regularity or enforceability of the obligation of
Maker.
<page 67>
Notwithstanding the death of the undersigned, this instrument shall
be binding on the estate of the decedent as to any obligation incurred
either before or after or extended after such death.
Payee shall not be bound to exhaust its recourse against or upon the
security or collateral it may hold or against any other person before
being entitled to payment from the undersigned or of the amount hereby
guaranteed. This Guaranty Agreement constitutes a guaranty of payment
and not of collection.
Payee is hereby authorized and empowered, at its option to appropriate
and apply to the payment and extinguishment of the liability of the
undersigned under this Guaranty Agreement at any time after such
liability shall become payable, any and all monies or other property of
the undersigned and the proceeds thereof (including safekeeping or
pledge) for this or any other liability of the undersigned to the Payee,
and including any balance on deposit or otherwise for the account of, or
to the credit of, or belonging to, the undersigned.
Payee is hereby authorized and empowered, at its option, at any time
after the liability created by the foregoing guaranty becomes payable,
to sell assign and deliver any securities or property at any time given
unto or left in the possession or custody of Payee for any purpose
(including safekeeping or pledge) for this or any other liability of the
undersigned or in which any of the undersigned may have an interest, at
public or private sale, for cash, upon credit, or for future delivery,
all at the option of Payee or any of its officers, without demand,
advertisement, or notice, all of which are hereby expressly waived.
Upon any sale or sales at public or private sale, above provided for,
Payee, its successors or assigns, may bid for and/or purchase the whole
or any part of such securities or property free from any right of
redemption, which is hereby waived and released.
In case of any sale by Payee of any of said securities or property on
credit or for future delivery, the securities and property sold may be
retained by Payee until the selling price is paid by the purchaser and
Payee shall incur no liability in case of failure of the purchaser to
take up and pay for the securities or property so sold. In case of any
such failure the securities or property may be again sold.
_____________________________ _________________________
Witness J. Steven Wilson
("Guarantor")
_____________________________
Witness
